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6 Nov, 2009 10:01

ROAR: Nord Stream gets green light

ROAR: Nord Stream gets green light

The Finnish and the Swedish governments have approved the construction of the Nord Stream natural gas pipeline through their waters in the Baltic Sea.

Denmark approved the project in October, and the last serious obstacles in the way of the construction have been lifted, the Russian media say.

The construction of the 1,200-kilometer undersea pipeline may start in spring 2010, after the formal permission from a Finnish environmental agency and the initiators of the project, Russia and Germany. “The approval by Russia and Germany is a technicality: no problems are expected there,” Valery Nesterov, an analyst of Troika Dialog told Vedomosti daily.

“The positive decision of the northern countries is a big success, making it possible to hope that the first stage of the pipeline will be put in operation no later than the end of 2011–beginning of 2012,” he said.

The $12 billion pipeline will bypass Ukraine, Poland and Belarus to deliver some 56 billion cubic meters of natural gas a year from the Russian port of Vyborg to the German port of Greifswald.

The participants of the project are Russia’s Gazprom, Germany’s E.ON Ruhrgas and BASF-Wintershall and Dutch Gasunie. Russia supplies around one quarter of Europe's gas.

The Russian authorities did not expect that the problems of Nord Stream would be solved so quickly, Gazeta daily said. At a recent meeting with Italian Prime Minister Silvio Berlusconi, his Russian counterpart Vladimir Putin said that the South Stream project might be fulfilled sooner than Nord Stream, the paper said.

Analysts often describe Nord Stream as a rival for projects backed by the US and the European Union. “Washington is worried that Europe will be fully dependent on energy supplies from Russia and is vigorously lobbying the Nabucco project… as an alternative way of energy supplies bypassing the Russian territory,” Komsomolskaya Pravda daily said.

“But Europe itself has preferred the pipeline that bypasses the uncertain Poles, the Baltic States and unpredictable Ukraine,” the paper said.

“Now Sweden and Finland have fully realized the concrete economic profits that Nord Stream will bring them,” Dmitry Orlov, general director of the Agency of Political and Economic Communications, said. “The more so as there are no alternative projects of transporting gas to Northern Europe,” he told Gazeta.ru website.

“Technological and ecological problems that were not motivated politically have been solved easily, and the present option is the optimal for the project,” Orlov said.

Political motivation related to interests of Poland and Estonia was lifted at the early stages of the project coordination, the website said. “Poland wanted the pipeline to be constructed on the ground via its territory,” it added.

One possibility involved the construction of the pipeline in Estonian territorial waters, and Estonia was fiercely bargaining, citing environmental problems, the website said. But Russia did not let itself be pushed around by Poland and Estonia, and the both countries “were left with nothing,” it added.

The choice of Finland instead of Estonia considerably reduces potential transit risks, Orlov said. He described Finland and Sweden as “reliable partners that value their reputation and do not break the agreements that have already been concluded.”

However, Nord Stream still has to get permission from Finnish environmental regulators. The environmental department of Uusimaa province is expected to declare its decision at the beginning of 2010.

“The relations between Russia and Finland are neutral and positive, but it is not fully clear if environmental agencies depend or do not depend on the Finnish government,” said Dmitry Oreshkin of the Institute of Geography of the Russian Academy of Sciences.

“When someone wants to block a decision on a particular project, they often use ecologists,” Oreshkin told Gazeta.ru. It looks like the government has approved the deal, “but it cannot do anything because ecologists are against it,” Oreshkin stressed. He believes that Finland is still ready for further bargaining.

However, Gazeta daily believes that Finland is interested in the project because the Russian government in October promised to continue a moratorium on increasing tariffs on timber in 2010 and probably 2011.

Sweden had to approve the project “because its two economic neighbors agreed,” believes Dmitry Abzalov of the Center for Political Conjuncture. In addition, Russia might have proposed some economic preferences to Sweden, Abzalov told Gazeta daily.

He also thinks that after Angela Merkel was elected chancellor again, one should not expect a change in Germany’s attitude to the Nord Stream project.

“Russia has won an important victory in the realization of one of its key energy and political projects,” Kommersant daily said. “However, the Swedish authorities have set a number of conditions to the operator of the project, including discontinuing the construction during the cod spawning season from May to October.”

Sweden also demanded that the consortium take full responsibility for the debris of military equipment and ammunition that could be found on the sea bed and, if possible, conduct their conservation, the paper said.

These conditions may influence the time of the project’s realization, but the consortium considers them “realistic,” the daily said.

Konstantin Simonov, general director of National Energy Security Fund, described the permission from Sweden as “surprising.” He noted that Stockholm “for years has had a tough position and demanded that [the consortium] negotiate ‘with every fish’ in the Baltic Sea.

It is unclear what Sweden may gain from this project, he said. “The Finns get a zero export duty on round timber for two years, Denmark – Russia’s support for their initiatives at the UN meeting on Kyoto protocol due in Copenhagen in December,” Simonov told Kommersant. However, it is Sweden’s decision that actually surrendered the last outpost of the opponents of the project, he said.

The decision of the Swedish government was motivated exclusively by ecological considerations, Vedomosti said. A source in the Swedish foreign ministry told the paper that Stockholm would not surrender to pressure and that he did know anything about “any political lobbying” for the project.

“Too many European countries are interested in the project, and they have probably taken part in persuading the Swedish authorities that it is necessary to create a new route of gas supplies to Europe,” director of the National Energy Institute Sergey Peresudov told RBC daily.

Financing remains “the main difficulty for the realization of the project,” the paper quoted Aleksandr Nazarov, analyst at the Metropol investment company, as saying. Nevertheless, now there are “no doubts that the Nord Stream project will be realized in time,” the paper said.

Sergey Borisov, RT