Final approval clears way for Nord Stream as transit outlook gets boost

Finland’s final approval for the construction of the Nord Stream gas pipeline brings closer the prospect of uninterrupted gas supply for European consumers.

Its time to start laying pipes which will ensure Europe’s energy security. Nord Stream has recieved the last permission from Finland for the construction the underwater pipeline that will cross the waters of 5 countries.

Vladimir Putin inderlined the importance of the project – promoting it personally at the Baltic Sea Action Summit  – and discussing the hard work ahead with the representatives of Dutch gas infrastructure company, Gasunie – one of 3 foreign partners for Russia’s Gazprom in the project. Vitaly Ermakov from CERA says the construction timeline will be tight.

“It is very important for the Nord Stream company to start laying the pipe as soon as possible, as soon as weather permits to do so. And its crucial for them to do the pipe laying over April to September period.”

The approvals from Baltic nations as well as political developments in Ukraine mean that the outlook for Russian gas shipments to the EU is improving rapidly. Competition between transit routes – long a Russian argument in favour of building Nord Stream – has already commenced, with Ukraine facing the prospect of losing a substantial portion of its lucrative transit near monopoly of Russian gas shipment to Europe. David Gray, Leader of Energy and Mining at PricewaterhouseCoopers says that means a change to a more competitive environment.

“The old structure, was built under the Soviet Union where it was all one state. Now we have a more competitive environment where there are many different states involved, and therefore their position as the sole transit route for Russian gas through into Europe – understandably that is probably not a tenable long term position, and Europe is going to look for additional sources of supply and additional routes, and so Ukraine understands that, and appreciates that in order to be competitive it needs to be competitive using its own routes, but also perhaps diversifying into looking at participating in the wider energy market."

But while Ukraine politics comes and goes Nord stream is moving ahead.

Final approval from Helsinki means that the first construction works begins in April. The Pipeline will start in the middle of the Baltic and work back towards gas sources in Russia, as well as towards European consumers. And now with more certainty one can say that the first gas will flow from 2012.