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Nord Stream

Nord Stream
Location of Nord Stream
Location of Nord Stream
Country Russian Federation, Germany
General direction east–west–south
From Russia
Passes through Baltic Sea
To Greifswald, Germany
General information
Type Natural gas
Partners Gazprom, E.ON, Wintershall, Gasunie, GDF Suez
Operator Nord Stream AG
Contractors Saipem, Allseas, Rambøll, Environmental Resource Management, Marin Mätteknik, IfAÖ, PeterGaz, DOF Subsea, Intec Engineering, Tideway BV, Royal Boskalis Westminster, EUROPIPE, OMK, Sumitomo, EUPEC PipeCoatings, Rolls-Royce plc, Dresser-Rand Group, Siirtec Nigi SPA
Commissioned 8 November 2011 (1st line)
8 October 2012 (2nd line)
Technical information
Length 1,222 km (759 mi)
Maximum discharge 55 billion cubic metres per year (2012–)
Diameter 1,220 mm (48 in)
Number of compressor stations 1
Compressor stations Vyborg

Nord Stream (former names: North Transgas and North European Gas Pipeline; Russian Federation to Greifswald in Germany that is owned and operated by Nord Stream AG. The project includes two parallel lines. The first line was laid by May 2011 and was inaugurated on 8 November 2011.[1][2] The second line was laid in 2011–2012 and was inaugurated on 8 October 2012. At 1,222 kilometres (759 mi) in length, it is the longest sub-sea pipeline in the world, surpassing the Langeled pipeline.[3][4] It has an annual capacity of 55 billion cubic metres (1.9 trillion cubic feet), but its capacity is planned to be doubled to 110 billion cubic metres (3.9 trillion cubic feet) by 2019, by laying two additional lines.[5] Due to EU restrictions on Gazprom, only 22.5 billion cubic metres (790 billion cubic feet) of its capacity is actually used.[6] The name occasionally has a wider meaning, including the feeding onshore pipeline in the Russian Federation, and further connections in Western Europe.

The project, which was promoted by the government of Russia and agreed to by the government of Germany, is controversial.[7]


  • History 1
  • Technical features 2
    • Russian onshore pipeline 2.1
    • Baltic Sea offshore pipeline 2.2
    • Western European pipelines 2.3
  • Supply sources 3
  • Costs and financing 4
  • Contractors 5
  • Project company 6
  • Transportation contracts 7
  • Controversy 8
    • Political aspects 8.1
    • Security and military aspects 8.2
    • Economic aspects 8.3
    • Environmental aspects 8.4
    • Ethical issues 8.5
    • Land-based alternatives 8.6
    • World War II graves 8.7
  • Expansion project 9
  • See also 10
  • References 11
  • External links 12


Nord Stream opening ceremony on 8 November 2011 with Angela Merkel, Dmitry Medvedev, Mark Rutte and François Fillon.

The original pipeline project started in 1997 when Gazprom and the Finnish company Neste (in 1998 merged with Imatran Voima to form Fortum, and 2004 separated again to Fortum and Neste Oil) formed the joint company North Transgas Oy for construction and operation of a gas pipeline from Russia to Northern Germany across the Baltic Sea.[8] North Transgas cooperated with the German gas company Ruhrgas (became later part of E.ON). A route survey in the Exclusive Economic Zones of Finland, Sweden, Denmark and Germany, and a feasibility study of the pipeline was conducted in 1998. Several routes were considered including routes with onshore segments through Finland and Sweden.[9]

On 24 April 2001, Gazprom, Fortum, Ruhrgas and Wintershall adopted a statement regarding a joint feasibility study for construction of the pipeline.[10] On 18 November 2002, the Management Committee of Gazprom approved a schedule of project implementation. In May 2005, Fortum withdrew from the project and sold its stake in North Transgas to Gazprom. As a result, Gazprom became the only shareholder of North Transgas Oy.[8][11]

On 8 September 2005, Gazprom, BASF and E.ON signed a basic agreement on the construction of a North European Gas Pipeline. On 30 November 2005, the North European Gas Pipeline Company (later renamed Nord Stream AG) was incorporated in Zug, Switzerland. On 9 December 2005, Gazprom started construction of the Russian onshore feeding pipeline. On 4 October 2006, the pipeline and the operating company were officially renamed Nord Stream AG.[12] After establishment of Nord Stream AG, all information related to the pipeline project, including results of the seabed survey of 1998, were transferred from North Transgas to the new company, and on 2 November 2006, North Transgas was officially dissolved.[13]

The environmental impact assessment started on 16 November 2006 with notification sent to Russia, Finland, Sweden, Denmark and Germany, as parties of origin (the countries whose exclusive economic zones and/or territorial waters the pipeline is planned to pass through), as well as to Poland, Latvia, Lithuania, and Estonia as affected parties.[14] The final report on transboundary environmental impact assessment was delivered on 9 March 2009.[15]

On 19 March 2007, Nord Stream AG mandated Italian company Snamprogetti, a subsidiary of Saipem, for detailed design engineering of the pipeline.[16] A letter of intent for construction works was signed with Saipem on 17 September 2007 and the contract was concluded on 24 June 2008.[17][18] On 25 September 2007, the pipe supply contracts were awarded to the pipe producers EUROPIPE and OMK, and on 18 February 2008, the concrete weight coating and logistics services agreement was awarded to EUPEC PipeCoatings S.A.[19][20] The supply contracts for the second line were awarded to OMK, Europipe and Sumitomo Heavy Industries on 22 January 2010.[21] On 30 December 2008 Rolls-Royce plc was awarded a contract to supply gas turbines driving centrifugal compressors and on 8 January 2009, Royal Boskalis Westminster and Tideway were awarded a joint venture seabed dredging contract.[22][23]

The agreement to take N.V. Nederlandse Gasunie to the consortium as the fourth partner, was signed on 6 November 2007.[24] On 10 June 2008, Gasunie was included in the register of shareholders.[25] On 1 March 2010, French energy company GDF Suez signed with Gazprom a memorandum of understanding to acquire 9% stake in the project.[26] The transaction was closed in July 2010.[27]

In August 2008, Nord Stream AG hired former Finnish prime minister Paavo Lipponen as a consultant to help speed up the application process in Finland and to serve as a link between Nord Stream and Finnish authorities.[28]

On 21 December 2007, Nord Stream AG submitted application documents to the Swedish government for the pipeline construction in the Swedish Exclusive Economic Zone.[29] On 12 February 2008, the Swedish government rejected the consortium's application which it had found incomplete.[30][31] New application was filed later. On 20 October 2009, Nord Stream received a construction permit to build the pipeline in the Danish waters.[32] On 5 November 2009, the Swedish and Finnish authorities gave a permit to lay the pipeline in their exclusive economic zones.[33] On 22 February 2010, the Regional State Administrative Agency for Southern Finland issued the final environmental permit allowing construction of the Finnish section of the pipeline.[34][35]

On 15 January 2010 construction of the Portovaya compressor station in Vyborg near the Gulf of Finland began. [36] [37] The first pipe of the pipeline was laid on 6 April 2010 in the Swedish exclusive economic zone by the Castoro Sei vessel. In addition to Castoro Sei, also Castoro 10 and Solitaire were contracted for pipe-laying works.[38] Construction of the pipeline was officially launched on 9 April 2010 at Portovaya Bay.[39]

The laying of the first line was completed on 4 May 2011 (the last pipe put in place), while all underwater works on the first line were completed on 21 June 2011.[4][40] In August 2011, Nord Stream was connected with the OPAL pipeline.[41] First gas was pumped into the first line on 6 September 2011.[42]

The pipeline was officially inaugurated by the German Chancellor Angela Merkel, Russian President Dmitry Medvedev and French Prime Minister François Fillon on 8 November 2011 at the ceremony held in Lubmin.[1][2][43] Initially, the pipeline was able to deliver 27.5 billion cubic metres (970 billion cubic feet) of gas annually, but this capacity was doubled once the second pipeline was finished.[44] Construction of the second line was completed in August 2012 and it was inaugurated on 8 October 2012.[45][46][47]

Technical features

Russian onshore pipeline

Construction of the feeding pipeline in Russia (Northern Lights pipeline, also supplies gas to the Northwestern region of Russia (Saint Petersburg and Leningrad Oblast).[48] A branch pipeline in Karelia will connect this feeding pipeline with Finland.[50]

Baltic Sea offshore pipeline

The semi-submersible pipe-laying vessel Castoro Sei operating for Nord Stream in the Baltic Sea south-east of Gotland, Sweden in late March 2011.
Two pipes are welded together on the Castoro Sei pipelaying vessel.

The Nord Stream offshore pipeline is ordered and operated by Nord Stream AG.[14][24] It runs from Vyborg compressor station at Portovaya Bay along the bottom of the Baltic Sea to Greifswald in Germany. The length of the subsea pipeline is 1,222 kilometres (759 mi), of which 1.5 kilometres (0.93 mi) in Russian inland, 121.8 kilometres (65.8 nmi) in Russian territorial waters, 1.4 kilometres (0.8 nmi) in the Russian economic zone, 375.3 kilometres (202.6 nmi) in the Finnish economic zone, 506.4 kilometres (273.4 nmi) in the Swedish economic zone, 87.7 kilometres (47.4 nmi) in the Danish territorial waters, 49.4 kilometres (26.7 nmi) in the Danish economic zone, 31.2 kilometres (16.8 nmi) in the German economic zone, 49.9 kilometres (26.9 nmi) in German territorial waters and 0.5 kilometres (0.31 mi) in German inland.[51] The pipeline has two parallel lines, each with capacity of 27.5 billion cubic metres (970 billion cubic feet) of natural gas per year. Pipes have a diameter of 1,220 millimetres (48 in), the wall thickness of 38 millimetres (1.50 in) and a working pressure of 220 bars (22 MPa).[14]

Nord Stream AG is studying viability of building the third and fourth lines.[52]

Western European pipelines

The Western European part of the project includes two transmission pipelines in Germany. The southern pipeline (OPAL pipeline) runs from Greifswald to Olbernhau near German-Czech border. It connects Nord Stream with JAGAL (connected to the Yamal-Europe pipeline), and STEGAL (connected to the Russian gas transport route via Czech and Slovak republics) transmission pipelines. The Gazelle pipeline, put into operation in January 2013,[53] links the OPAL pipeline with South-German gas network.

The western pipeline (NEL pipeline) will run from Greifswald to Achim, where it will be connected with the Rehden-Hamburg gas pipeline.[54] Together with the MIDAL pipeline it will create the Greifswald–Bunde connection. Further gas delivery to the United Kingdom will be made through the planned connection between Bunde and Den Helder, and from there through the offshore interconnector BalgzandBacton (BBL Pipeline).

Gazprom has also bought an abandoned mine (Hinrichshagen Structure) in Waren, which is planned to convert into the largest underground gas storage in Europe with capacity of 5 billion cubic metres (180 billion cubic feet).[55][56]

Supply sources

The main source of natural gas for the Nord Stream pipeline is

  • Nord Stream official website (English) (Russian) (German)
  • Sweden and the NEGP: A Pilot Study of the North European Gas Pipeline and Sweden's Dependence on Russian Energy, Base data report by Robert L. Larsson. June 2006
  • Map of the disputed between Poland and Danmark zone (Polish)
  • Original letter from Poland about disputed area of the Baltic sea bottom
  • Protect the Baltic Sea A petition demanding an independent environmental impact assessment of the Nord Stream gas pipeline project
  • Projected Gas Routes to Europe
  • A. Łoskot-Strachota, Ł. Antas, Nord Stream on the liberalising EU gas market, Centre for Eastern Studies, March 2010
  • 2010-03-25, Activists Say 500,000 Tonnes of Chemical Weapons in Baltic,
  • "Sea Change" (Spektrum der Wissenschaft Custom Publishing, 2011)

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See also

In 2011, Nord Stream AG started evaluation of the expansion project which would include two additional lines which would increase the overall annual capacity up to 110 billion cubic metres (3.9 trillion cubic feet). In August 2012, Nord Stream AG applied to Finnish and Estonian governments for route studies in their exclusive economic zones for the third and fourth lines.[52] According to the project information document, the route of additional lines would follow the route of existing lines, but would have different landfalls. In Russia, the landfall point would be in Kolganpya (Kolkanpää) at the Soikinsky Peninsula, or at the Kurgalsky Peninsula – both near the Estonian border in Ingria, Leningrad Oblast. The preferable landfall in Germany would be in the Bay of Greifswald; however, the existing Nord Stream terminal at Lubmin cannot accommodate further pipelines.[143] It was considered to route the additional pipelines to the United Kingdom but this plan was abandoned.[143][144] In January 2015 it was announced that the expansion project is cancelled as the existing lines run at half capacity due to EU restrictions on Gazprom.[6] However, in June 2015 an agreement to built two additional lines was signed between Gazprom, Royal Dutch Shell, E.ON, OMV, and Engie (former GDF Suez).[145] There may be other shareholder in the expansion project.[5]

Expansion project

In addition to the wreck of the Soviet submarine, there are sunken ships on the route of Nord Stream in the Bay of Greifswald and in the Gulf of Finland. The ship in the Bay of Greifswald is one of 20 sunk in 1715 by the Swedish navy to create a physical barrier across the shallow entrance to the Bay of Greifswald coastal lagoon.[141] Russian archaeologists claimed that the ship in the Gulf of Finland "was probably built in 1710 and sank during a raid aimed at conquering Finland" in 1713 during Peter the Great's reign. Russia Today speculated the ship was under the tsar's "personal command".[142]

A former member of the European Parliament from Estonia, Andres Tarand has raised the issue that the Nord Stream pipeline could disturb World War II graves dating from naval battles in 1941. A Nord Stream spokesman has stated that only one sunken ship is in the vicinity of the planned pipeline and added that it wouldn't be disturbed.[140] However, on 16 July 2008 was announced that one of DOF Subsea's seismic vessels during a shoot for the planned Nord Stream pipeline in Finland's exclusive economic zone in the Gulf of Finland, discovered the wreck of a submarine with Soviet markings, believed to have sunk during World War II.[68]

World War II graves

On 11 January 2007, the Ministry of Trade and Industry of Finland made a statement on the environmental impact assessment programme of the Russia-Germany natural gas pipeline, in which it mentioned that alternative routes via the Baltic states, Kaliningrad and/or Poland might theoretically be shorter than the route across the Baltic Sea, would be easier to flexibly increase the capacity of the pipeline, and might have better financial results.[136] There were also calls from Sweden to consider rerouting the pipeline onto dry land.[111] Poland had proposed the construction of a second line of the Yamal–Europe pipeline, as well as the Amber pipeline through the Baltic states and Poland as land-based alternatives to the offshore pipeline. The Amber project foresees laying a natural gas pipeline across the Tver, Novgorod and Pskov oblasts in Russia and then through Latvia and Lithuania to Poland, where it would be re-connected to the Yamal–Europe pipeline.[9] Latvia has proposed using its underground gas storage facilities if the onshore route were to be used.[114] Proponents have claimed that the Amber pipeline would cost half as much as an underwater pipeline, would be shorter, and would have less environmental impact.[137] Critics of this proposal say that in this case it would be more expensive for the suppliers over the long-term perspective, because the main aim of the project is to reduce transit costs.[138] Nord Stream AG has responded that the Baltic Sea would be the only route for the pipeline and it will not consider an overland alternative.[139]

Land-based alternatives

In February 2009, the Swedish prosecutor's office started an investigation based on suspicions of bribery and corruption after a college on the island of Gotland received a donation from Nord Stream. The 5 million Swedish kronor (US$574,000) donation was directed to a professor at Gotland University College who had previously warned that the Nord Stream pipeline would come too close to a sensitive bird zone.[133] The consortium has hired several former high-ranking officials, such as Ulrica Schenström, former undersecretary at the Swedish Prime Minister's office, and Dan Svanell, former press secretary for several politicians in the Swedish Social Democratic Party.[134] In addition, the former Prime Minister of Finland, Paavo Lipponen, had worked for Nord Stream as an adviser since 2008.[135]

The agreement to build the pipeline was signed ten days before the German parliamentary election. On 24 October 2005, a few weeks before Schröder had stepped down as Chancellor, the German government guaranteed to cover €1 billion of the Nord Stream project cost, should Gazprom default on a loan. However, this guarantee expired at the end of 2006 without ever having been needed.[129] Soon after leaving the post of Chancellor of Germany, Gerhard Schröder agreed to head the shareholders' committee of Nord Stream AG. This has been widely described by German and international media as a conflict of interest,[130][131][132] the implication being that the pipeline project may have been pushed through for personal gain rather than for improving gas supplies to Germany. Information about the German government's guarantee was requested by the European Commission. No formal charges have been filed against any party despite years of exhaustive investigations.[129]

The former Chancellor of Germany, Gerhard Schröder, and the President of Russia, Vladimir Putin, were strong advocates of the pipeline project during the negotiation phase. International media alluded to a past relationship between the Managing Director of Nord Stream AG, Matthias Warnig, himself a former East German secret police officer, and Vladimir Putin when he was a KGB agent in East Germany.[124][125][126][127] These allegations were denied by Matthias Warning, who said that he had met Vladimir Putin for the first time in his life in 1991, when Putin was the head of the Committee for External Relations of the Saint Petersburg Mayor's Office.[127][128]

Ethical issues

One of the raised problems was that the Baltic Sea and particularly Gulf of Finland was heavily mined during World War I and II, with many mines still on the sea.[117] According to Marin Mätteknik around 85,000 mines were laid during the First and Second World Wars, of which only half have been recovered. A lot of munitions have also been dumped in this sea.[122] Critics of the pipeline voiced fears that the pipeline would disturb ammunition dumps. In November 2008 it was reported that the pipeline will run through old sea mine defense lines and that the Gulf of Finland is considered one of the most heavily mined sea areas in the world.[123] Sunken mines, which have been found on the pipeline route, lay primarily in international waters at a depth of more than 70 metres (230 ft). Nord Stream AG detonated the mines underwater.[123]

Concerns raised, that originally Nord Stream AG planned on rinsing out the pipeline with 2.3 billion liters of a solution containing glutaraldehyde, pumped afterward into the Baltic Sea. Nord Stream AG responded that glutaraldehyde would not used, and even had the chemical been used, the effects would have been brief and localized due to the speed with which the chemical breaks down once it comes in contact with water.[121]

Russian officials described these concerns as far-fetched and politically motivated by opponents of the project. They argued that during the construction the seabed will be cleaned, rather than endangered. Russian Foreign Minister Sergey Lavrov has claimed that Russia fully respects the desire to provide for the 100% environmental sustainability of the project and that Russia is fully supportive of such an approach, and that all environmental concerns would be addressed in the process of environmental impact assessment.[120]

In April 2007, the Young Conservative League (YCL) of Lithuania started an European Parliament endorsed by 542 votes to 60 a non-binding report calling on the European Commission to evaluate the additional impact on the Baltic Sea caused by the Nord Stream project.[119] The Riigikogu made a declaration on 27 October 2009, expressing "concern over the possible environmental impacts of the gas line" and emphasizing that international conventions have deemed "the Baltic Sea in an especially vulnerable environmental status".[82]

The impact on bird and marine life in the Baltic Sea is also a concern, as the Baltic sea is recognized by the Gulf of Finland is the most vulnerable part of the Baltic Sea and assumed damage to the island territory of the planned Ingermanland nature preserve as a result of laying the pipeline.[115] Swedish environmental groups are concerned that the pipeline is planned to pass too closely to the border of the marine reserve near Gotland.[116] Also Greenpeace is concerned that the pipeline would pass through several sites designated marine conservation areas.[117]

Before construction there were concerns that during construction the sea bed would be disturbed, dislodging World War II-era naval mines and toxic materials including mines, chemical waste, chemical munitions and other items dumped in the Baltic Sea in the past decades, and thereby toxic substances could surface from the seabed damaging the Baltic's particularly sensitive ecosystem.[108][109][110][111] Swedish Environment Minister Andreas Carlgren demanded that the environmental analysis should include alternative ways of taking the pipeline across the Baltic, as the pipeline is projected to be passing through areas considered environmentally problematic and risky.[112] Sweden's three opposition parties called for an examination of the possibility of rerouting the pipeline onto dry land.[111] Finnish environmental groups campaigned to consider the more southern route, claiming that the sea bed is flatter and so construction would be more straightforward, and therefore potentially less disruptive to waste, including dioxins and dioxin-like compounds, littered on the sea bed.[113] Latvian president Valdis Zatlers said that Nord Stream was environmentally hazardous as, unlike the North Sea, there is no such water circulation in the Baltic Sea.[114] Ene Ergma, Speaker of the Riigikogu (Parliament of Estonia), warned that the pipeline work rips a canal in the seabed which will demand leveling the sand that lies along the way, atomizing volcanic formations and disposing of fill along the bottom of the sea, altering sea currents.[115]

Environmental aspects

As the Nord Stream pipeline crosses the waterway to Polish ports in Szczecin and Świnoujście, there were concerns that it will reduce the depth of the waterway leading to the ports.[105][106][107] However, Polish prime minister Donald Tusk as also several experts have confirmed that the Nord Stream pipeline does not block the development plans of Swinoujscie and Szczecin ports.[107][107]

Opponents say that the maintenance costs of a submarine pipeline are higher than for an overland route. In 1998, former Gazprom chairman Rem Vyakhirev claimed that the project was economically unfeasible.[104] This estimation may not be valid anymore as the price of natural gas and construction costs have changed since then.

Russian and German officials have claimed that the pipeline leads to economic savings due to the elimination of transit fees (as transit countries would be bypassed), and a higher operating pressure of the offshore pipeline which leads to lower operating costs (by eliminating the necessity for expensive midway compressor stations).[101] According to Ukrtransgaz, the Ukrainian gas transportation system operator, Ukraine alone will lose natural gas transit revenues up to $720 million per year.[102] Gazprom has stated that it will divert 20 billion m3 of natural gas transported through Ukraine to Nord Stream.[103]

Economic aspects

German Bundeswehr asked Nord Stream to change the planned route because the pipeline is laid close to a sea testing ground near Rügen, which is actively used for naval exercises.[100]

Deputy Chairman of the Board of Executive Directors of Gazprom Alexander Medvedev has dismissed these concerns, stating that "some objections are put forward that are laughable—political, military or linked to spying. That is really surprising because in the modern world ... it is laughable to say a gas pipeline is a weapon in a spy war."[99]

Swedish military experts and several politicians, including former Minister for Defence Mikael Odenberg, have stated that the pipeline can cause a security policy problem for Sweden.[94] According to Odenberg, the pipeline motivates Russian navy presence in Swedish economic zone and the Russians can use this for military intelligence should they want to.[95] Finnish military scholar Alpo Juntunen has said that even though the political discussion over Nord Stream in Finland concentrates on the various ecological aspects, there are clearly military implications to the pipeline that are not discussed openly in Finland.[96] More political concerns were raised when Vladimir Putin stated that the ecological safety of the pipeline project will be ensured by using the Baltic Fleet of the Russian Navy.[97] German weekly Stern has reported that the fibre optic cable and repeater stations along the pipeline could theoretically also be used for espionage. Nord Stream AG asserted that a fibre-optic control cable was neither necessary nor technically planned.[98]

Security and military aspects

The Russian response has been that the pipeline increases Europe's energy security, and that the criticism is caused by bitterness about the loss of significant transit revenues, as well as the loss of political influence that stems from the transit countries' ability to hold Russian gas supplies to Western Europe hostage to their local political agendas.[92] It would reduce Russia's dependence on the transit countries as for the first time it would link Russia directly to Western Europe.[87] According to Gazprom, the direct connection to Germany would decrease risks in the gas transit zones, including the political risk of cutting off Russian gas exports to Western Europe.[93]

Opponents have seen the pipeline as a move by Russia to bypass traditional transit countries (currently Ukraine, Slovakia, Czech Republic, Belarus and Poland).[84] Some transit countries are concerned that a long-term plan of the Kremlin is to attempt to exert political influence on them by threatening their gas supply without affecting supplies to Western Europe.[85][86] The fears are strengthened by the fact that Russia has refused to ratify the Energy Charter Treaty. Critics of Nord Stream say that Europe could become dangerously dependent on Russian natural gas, particularly since Russia could face problems meeting a surge in domestic as well as foreign demand.[87][88][89] Following several Russia–Ukraine gas disputes, as well as foreign policy towards Eastern Europe, it has been noted that the gas supplies by Russia can be used as a political tool.[90] The Swedish Defence Research Agency study, conducted by Robert L. Larsson, counted over 55 incidents since 1991, most with "both political and economic underpinnings".[88][89] In April 2006 Radosław Sikorski, then Poland's defence minister, compared the project to the infamous 1939 Nazi-Soviet Molotov–Ribbentrop Pact. [91] In his book The New Cold War: Putin's Russia and the Threat to the West, Edward Lucas states that "though Nord Stream's backers insist that the project is business pure and simple, this would be easier to believe if it were more transparent."[88] In the report published by the Fridtjof Nansen Institute, Norwegian researcher Bendik Solum Whist notes that Nord Stream AG was incorporated in Switzerland, "whose strict banking secrecy laws makes the project less transparent than it would have been if based within the EU".[88] Secondly, the Russian energy sector "in general lacks transparency" and Gazprom "is no exception".[88]

Major existing and planned natural gas pipelines supplying Russian gas to Europe.

Political aspects

The pipeline project was criticized by some countries and environmental organizations (such as the World Wide Fund for Nature).[78][79][80][81][82] At the same time, the European Commission energy commissioner office confirmed that the EU supports the project "as an additional source of gas supplies from Russia".[83]


On 29 August 2006 Gazprom and E.ON Ruhrgas signed an agreement to extend current contracts on natural gas supplies and have signed a contract for an additional 4 billion cubic metres (140 billion cubic feet) per year through the Nord Stream pipeline.[76] On 19 December 2006, Gazprom and Gaz de France (now GDF Suez) agreed to an additional 2.5 billion cubic metres (88 billion cubic feet) gas supply through the Nord Stream.[77]

On 13 October 2005 Gazprom's export arm Gazprom Export signed a contract with German gas company Wingas, a joint venture of Gazprom and Wintershall (subsidiary of BASF), to supply 9 billion cubic metres (320 billion cubic feet) of natural gas per year for 25 years.[73] On 16 June 2006 Gazprom and Danish DONG Energy signed a 20-year contract for delivery of 1 billion cubic metres (35 billion cubic feet) Russian gas per year to Denmark, while DONG Energy will supply 600 million cubic metres (21 billion cubic feet) natural gas per year to the Gazprom's subsidiary, Gazprom Marketing and Trading, in the United Kingdom.[74] 1 October 2009 the companies signed a contract to double the delivery to Denmark.[75]

Transportation contracts

The Nord Stream offshore pipeline is operated by the special purpose company—Nord Stream AG. Nord Stream AG was incorporated in Zug, Switzerland on 30 November 2005. Shareholders of the company are the Russian gas company Gazprom (51% of shares), German gas companies Winthershall and E.ON Ruhrgas (both 15.5%), the Dutch gas company Gasunie (9%), and the French gas company GDF Suez (9%).[14][24] The Managing Director of Nord Stream AG is Matthias Warnig and the chairman of the shareholders' committee is German ex-chancellor Gerhard Schröder.

Project company

For the construction period, Nord Stream AG created a logistic center in Gotland. Other interim stock yards are located in Mukran, in Kotka, in Hanko (Finland) and in Karlskrona (Sweden).[20]

Work preliminary gas compressor station.[22] Dresser-Rand Group supplied DATUM compressors and Siirtec Nigi SPA provided a gas treatment unit for the Portovaya station.[71][72]

The environmental impact assessment was carried out by Rambøll and Environmental Resource Management. The route and seabed surveys were conducted by Marin Mätteknik, IfAÖ, PeterGaz and DOF Subsea.[68][69]


There are two tranches.[64][65] The first tranche for a €3.9 billion includes a 3.1 billion, 16-year facility covered by export credit agencies and a €800 million, 10-year uncovered commercial loan to be serviced by earnings from the transportation contracts. A €1.6 billion is covered by French credit insures company Euler Hermes, a €1 billion by the German United Loan Guarantee Programme UFK, and a €500 million Italian Export Credit Agency SACE SpA. Loans to be provided by 26 commercial banks. Crédit Agricole is documentation bank and bank facility agent. Société Générale is intercreditor agent, Sace facility agent, security trustee and model bank. Commerzbank is Hermes facility agent, UniCredit is UFK facility agent, Deutsche Bank is account bank and Sumitomo Mitsui Banking Corporation is technical and environmental bank.[63][64] The financial advisers were Société Générale, Royal Bank of Scotland (ABN Amro), Dresdner Kleinwort (Commerzbank), and Unicredit.[66][67] The legal adviser to Nord Stream was White & Case and legal adviser for the lenders was Clifford Chance.[64]

According to Gazprom, the costs of the onshore pipelines in Russia and Germany are around €6 billion.[61] The offshore section of the project is expected to cost €8.8 billion.[62] 30% of the financing was raised through equity provided by shareholders in proportion to their stakes in the project, while 70% came from external financing by banks.[63]

Costs and financing


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