Europe's pipeline politics

Jun 02, 2009 02:00 AM

by Vafa Fakhri

On the shores of the Baltic Sea, among the sea birds and sand dunes, a quiet energy revolution is taking place. If all goes to plan, the island of Ruegen, off the coast of Northern Germany, will host the terminal for the massive new Nord Stream gas pipeline connecting Russia with the heart of Western Europe.
After years of unstable relations between Moscow and its former satellite states, Nord Stream is designed to circumvent regional politics by cutting out transit countries. If it wins final approval, the 1,200 km (745 mile) pipeline will run under the Baltic Sea from the Russian port of Vyborg. It could mark a significant change in Europe's energy security. At present, 80 % of Russian gas delivered to the EU has to cross Ukraine. In the past three years, disputes between Russia and its neighbour over gas prices have led to occasional shutdowns of supplies to much of Europe for weeks, causing severe shortages for millions.

Avoiding disputes
Europe's policy makers are looking for ways to take the politics out of pipelines. Alexander Rahr from the German Council on Foreign Relations says that Europe's dependence on only two existing pipelines makes it a hostage to disputes.
"If a country like Ukraine gets a problem with Russia and doesn't pay its gas bill and Russian supplies are cut off, then the whole of Europe suffers in the middle of winter," he says. "Last time we didn't get the gas in winter that we bought from Russia, and also we paid Ukraine for the transit of our goods."
The Nord Stream company says that its pipeline will deliver up to 55 bn cm of gas every year straight to Western Europe.

Ready to roll
About 300 km (185 miles) north of the German capital, Berlin, is Sassnitz, a holiday resort with beautiful chalk cliffs. Set in the Jasmund national park, it is a haven for wildlife and walkers. Sassnitz's ferry terminal is a key transit point for travellers to Scandinavia and the Baltic states. Now the area is becoming a key logistics site for the Nord Stream project.
More than 19,400 pipeline sections will be processed here, reinforced with a layer of concrete. Most have already been delivered and are kept in storage. Once the green light is given they will be laid along the bottom of the Baltic Sea all the way to the coast of Russia.

The pipeline project is mostly popular here -- in the past few months it has created 200 new jobs. But environmentalists and holidaymakers express concern about the potential impact of such a massive scheme.
Jochen Lamp of the conservation group WWF in Germany says the Baltic Sea is an important habitat for migrant birds and mammals such as sea lions. He also says that mines left from the World War II could create serious problems. Nord Stream says its studies show the environmental impact will be negligible, and that it is more than able to handle the technical and engineering challenges. It hopes gas from Nord Stream could flow as early as 2011.

Some 800 km (500 miles) to the south lies Baumgarten, a tiny hamlet in eastern Austria. A third of all exports from Russia are pumped through here to Western European consumers. The station is equipped with the latest technology and is controlled remotely from offices in Vienna.
It could also become the end point for another major pipeline project, pursued by the European Union, called Nabucco. Named after an opera by Verdi, this pipeline would bring gas from Central Asia and the Middle East to Europe, bypassing Russia completely. It is planned to take a 3,000 km (1,865 mile) overland route through Turkey, Bulgaria, Romania, Hungary and Austria and will deliver 30 bn cm of gas a year to Europe.

But with so many countries involved, the political jigsaw is complex. And critics of the project say it's not clear where the gas to fill the pipeline will come from. Six major European energy companies are shareholders in the Nabucco pipeline consortium, including the Austrian energy giant, OMV, which also runs the Baumgarten facility.
Werner Auli, a member of OMV's executive board, says there is no issue about supplying Nabucco.
"There will be enough gas in Azerbaijan, Iraq, Egypt and in the long term even Iran to make the pipeline viable," he says. "What is needed now is a plan to win political agreement and begin work on the network of supply pipes which will eventually feed into the Nabucco line."

As for the political will, Nabucco features highly in the EU's energy strategy. But not all member states seem to be behind the project with the same vigour. Axel Berg, energy spokesman for the governing German Social Democrats (SPD), insists that his country's government is interested in both pipelines, but admits that Nord Stream is the favourite.
"Maybe there is not enough gas to pump into the Nabucco pipeline. But there are reserves in the Caspian region," he says. "Secondly, we are old friends with Russia."

Yet the two projects -- driven by the same need for secure energy supplies -- may in the end be complementary schemes, not rivals. Paul Sampson, an analyst for Energy Intelligence, says that in the long term, the Nabucco project -- with its diverse sourcing of gas -- may deliver the goods.
But at this stage much of the work is theoretical. For the nearer future, he says, Europe will look to the Nord Stream project to deliver gas to its industry and homes.

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