POWER May 2012 - 14

3. First in line. The first line of the two Nord Stream 1,224-kilometer gas pipelines running in parallel through the Baltic Sea from Vyborg,
Russia, to Lubmin, near Greifswald, Germany, began transporting gas in mid-November last year. The route crosses exclusive economic zones of
Russia, Finland, Sweden, Denmark, and Germany. The second line will come on stream later this year. Interest in the €15 billion project surged
following the Russian-Ukraine gas crisis of 2009, which shut off gas delivery to Europe for almost two weeks. Courtesy: Gazprom
recession, and Gazprom insisted Ukraine fulfill its contractual obligations
and buy quantities of gas agreed upon in 2009.
In the latest development, Ukraine announced plans this
March to sign a contract with Germany's RWE energy firm to import
Russian gas through Slovakia using reverse-flow technology.
Rejecting allegations that the plans are a ploy to force Gazprom
to discount supplies, Ukraine Prime Minister Nikolay Azarov told
German newspaper Die Welt that even though Ukraine buys much
more gas than Germany does, it has to pay a much higher price,
as negotiated in the 2009 contract. Buying Russian gas from a
German company would be cheaper than buying it directly from
Russia, he said.
The amount Ukraine proposes to buy from RWE is an estimated
3 million cubic meters of gas per day-miniscule compared to
the 100 million cubic meters per day it consumes from Russia,
analysts note, but it is the first, critical attempt by Ukraine to
reduce its dependence on imports from Gazprom, they say.
Over the rest of Europe, countries hard-hit by interruptions
in gas supply have also been seeking ways to wean themselves
from reliance on the Ukraine trade route. The future of European
gas markets is generally dependent on three new gas pipeline
projects. Two, the Nord Stream and South Stream pipelines, are
majority owned by Gazprom, and the third, the Nabucco project,
is supported by Europe and Turkey.
Despite some European hostility to the project owing to
increased European energy dependency on Russia, the first of
the two Nord Stream 1,224-kilometer (km) offshore pipelines
directly connecting Russian gas reserves and energy markets
14
in the EU began transporting gas in mid-November last year
(Figure 3). The second line, which runs parallel to the first, is
expected to come on stream in the last quarter of 2012. Each
line has a transport capacity of roughly 27.5 billion cubic meters
(bcm) of gas a year.
Completion of the Gazprom and ENI South Stream pipeline-
which proposes to carry 63 bcm of gas per year through the
Black Sea to Bulgaria, and farther, to Greece, Italy, and Austria-is
expected by 2015, though there are many doubts about
its feasibility.
Some analysts view the €10 billion project as a direct
competitor of the EU-backed Nabucco line. The Nabucco line
has been planned to run from the eastern border of Turkey
to Baumgarten in Austria via Bulgaria, Romania, and Hungary.
Preliminary analyses had cited Iran and Turkmenistan
as sources of gas supplies for the conduit, but it was later
decided the pipeline would carry gas from the Caspian region,
notably from the Shah Deniz field in Azerbaijan, to Europe by
2017. This pipeline was intended to diversify Europe's current
natural gas suppliers and delivery routes and create a southern
corridor free from Russian interests.
The 3,900-km Nabucco pipeline-whose shareholders include
Austria's OMV, Hungary's MOL, Romania's Transgaz, the Bulgarian
Energy Holding, Turkey's Botas, and Germany's RWE-would
reach a capacity of 31 bcm a year, meeting just 5% of Europe's
gas needs. In mid-March, however, developers proposed a route
half the length of the original project, running from the TurkishBulgarian
border to Austria.
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