Russia’s role as Europe’s dominant external gas supplier strengthened in the last 12 months as Russian gas giant Gazprom boosted its export routes to key central and western European gas markets. But tensions between Moscow and Brussels heightened as the European Commission challenged Gazprom’s operations in eastern Europe. Paul Whitehead reports*.
RUSSIA TIGHTENS GRIP
ON EUROPE’S GAS
O
ctober 8 marked a new landmark in Russia’s gas exports as the second pipeline in the Nord Stream gas supply route began exporting gas to Germany. The twin pipelines, which run between Portovaya Bay near Vyborg on Russia’s Baltic coast, across the Baltic Sea to Lubmin in northern Germany, provide a direct route for Russia’s gas exports, which have been hampered in the past because of disputes with transit countries Ukraine and Belarus. “Nord Stream will meet Europe’s growing demand for energy resources. Gas will be supplied directly by the shortest route, linking the major Russian gas reserves to European markets without transit risks, steadily and smoothly. We can guarantee this,” Russian President Vladimir Putin said as the second pipeline was inaugurated at a ceremony in Portovaya Bay. 8 Industry Europe
The second line came just 11 months after the first line was launched, and 30 months after construction began. Together they have enough capacity to ship 55 billion cubic metres of gas a year to Lubmin, where it is transported onwards to Belgium, Denmark, France, the Netherlands and other European markets, as well as Germany. Gazprom has a 51 per cent controlling stake in the Nord Stream consortium with western partners German BASF/Wintershall and E.ON Ruhrgas owning 15.5 per cent each, while Dutch Gasunie and French GDF Suez each have 9 per cent stakes. The partners now plan to sign a memorandum of understanding to build further lines along the route, Gazprom CEO Alexei Miller told the opening ceremony. Nord Stream feasibility studies concluded an extension of one or two lines would be technically and financially
viable, with several routes being considered. And Miller said one of these could be a connection to the UK, western Europe’s biggest gas market, whose indigenous gas sources, whilst the biggest in the EU, are fast depleting. Wherever the additional lines are built, they would take total Nord Stream capacity to 110 billion cubic metres/year. This would further tighten Russia’s grip on Europe’s gas supply at a time when political leaders in Brussels and EU capitals are grappling with concerns over security of supply as Europe’s existing gas reserves dwindle and other energy sources like coal and nuclear become less viable because of environmental legislation and safety concerns.
Pincer movement And Nord Stream is just part of the picture in Gazprom’s quest to cut dependence on transit countries, which have caused it so
