Nord Stream opening strengthens EU-Russia interdependence

KOSTIS GEROPOULOS | NOVEMBER 2011 | SOURCE: New Europe

On 8 November, German Chancellor Angela Merkel and Russian President Dmitry Medvedev inaugurated the 1,224-kilometre Nord Stream pipeline that will supply the European Union with Russian gas bypassing existing transit countries.

The pipeline took 19 months to build under the Baltic Sea at a cost of €7.4 billion. It is designed to operate for 50 years.

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The ceremony to open the symbolic white tap of the gas pipeline in the town of Lubmin in northern Germany, where the pipe comes ashore, was also attended by Dutch Prime Minister Mark Rutte and French Prime Minister Francois Fillon.

Energy Commissioner Günther Oettinger noted that when a plan to lay a second pipeline parallel to the existing one is completed, the twin pipelines will supply the EU with 10% of its annual gas needs. Russia currently provides almost 30% of the gas consumed in Europe.

Merkel said that the pipeline created a long-term bond between the EU and Russia: "We will be tied closely to one another for decades," she said in Lubmin. "The construction work has proceeded astonishingly quickly," added Merkel, in praise of the engineers who built the challenging project.

Medvedev said that both sides could work together on "many excellent projects" in the future.

Julian Lee, senior energy analyst at the Centre for Global Energy Studies (CGES) in London told New Europe on 8 November that Nord Stream is generally a very positive development for long-term gas supply security. But he stressed that the differences between EU and Russia would remain.

“I don’t expect that it will automatically mean that there are no more disagreements between Russia and Europe. I’m sure they will continue over the same of sort of issues that we’ve seen in the past: over pricing and over concerns over monopoly positions and competition,” Lee said.

Even though the EU accepts that it will be to a large part dependent on Russia, it doesn’t want to be overly reliant on its neighbour. Therefore, Brussels wants to bring gas into Europe from new producers along new routes – a move that has aggravated Moscow.

“It’s generally accepted within Europe that Russia is and will remain probably the most significant supplier of imported gas into Europe so diversification is not anti-Russian but it does recognise that Europe doesn’t want to become overly dependent on Russia,” Lee said.

However, most of these alternative gas projects focus on Europe’s Southern Gas Corridor and it’s in that direction that issues of diversifications really have an impact rather than in the northern direction.

Asked if the EU prefers Nord Stream over another Russian-led project -South Stream – Lee said that Europe does and always has supported Nord Stream. “The issues with South Stream in my mind are very much issues over timing rather than over its very existence. The only reason that Europe is so uncomfortable at the moment with South Stream is that the EU doesn’t want to see South Stream derailing Nabucco."

"If Nabucco is built then I think the attitude to South Stream subsequently becomes very different. If Nabucco is ever secure we will see a much greater degree of support within Europe for South Stream. Once it’s no longer seen as a threat to diversification,” the CGES energy analyst told New Europe.

Related article: Nord Stream begins pipelaying

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