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Nord Stream Pipeline Work Gets Started

Russian and EU officials will on Friday (9 April) mark the start of construction of the Nord Stream gas pipeline, as Russia strengthens its grip on EU gas supply despite concerns about its reliability.

Russian President Dmitry Medvedev, EU energy commissioner Gunther Oettinger, Dutch leader Jan Peter Balkenende and French secretary of state Anne-Marie Idrac are to attend the ceremony in Vyborg, Russia. German Chancellor Angela Merkel is to take part by video-link.

The officials represent the main Nord Stream shareholders in a consortium which is dominated by Russia's Gazprom (OGZPY) but also includes the Netherlands' Gasunie and Germany's BASF (BASFY) and E.ON (EONGY) and which is to be joined by French firm GDF Suez (GDFZY).

The first chunk of 48-inch-diameter steel pipe was laid on Wednesday on the Baltic Sea bed near the Swedish island of Gotland.

The pipeline, running from Vyborg in Russia to Greifswald in Germany, is to start pumping gas in 2011 and to reach full capacity by 2012, supplying 55 billion cubic metres of gas – enough to power 26 million households.

Friday's ceremony follows years of debate among EU capitals, with Poland and the Baltic countries seeing Nord Stream as a potential tool for political blackmail, enabling Moscow to cut off gas to its former vassals while keeping it flowing to rich countries in Western Europe.

Polish foreign minister Radek Sikorski once compared it to the Molotov-Ribbentrop pact signed in 1939 between Russia and Germany to partition Poland.

But the European Commission sees Nord Stream as an EU "priority project" which will diversify routes of supply and pave the way for future growth in EU gas consumption, which is expected to double by 2030.

Russian energy minister Sergei Shmatko on Thursday also told news-agency Itar-Tass that Moscow will in April sign a deal with the Austrian government over its participation in the South Stream project.

Russia's South Stream pipeline is to pump 63 billion cubic metres of gas a year under the Black Sea to Bulgaria, Austria, Greece, Hungary, Italy and Slovenia from 2015 onward, with construction due to begin later this year.

The developments will entrench Russia's central position in EU natural gas supplies and reduce the viability of EU efforts to build a competing pipeline, Nabucco, to gain direct access to Caspian Sea-area resources.

The recent advent of a new pro-Russian government in Ukraine is also set to complicate EU plans to Europeanise Ukraine's gas transit system in order to help avoid cut-offs such as the ones in 2006 and 2009.

Russia currently supplies around 25 percent of EU gas consumption. But the 2009 crisis angered EU leaders, prompting EU commission chief Jose Manuel Barroso at the time to say:

"I've been involved in mediation processes since I was young, including in African matters. It's the first time I saw agreements that were systematically not respected...Gas coming from Russia is not secure."

Commission officials have in private also raised eyebrows at the strong links between Gazprom and Russian security services.

Matthias Warnig, the managing director of Nord Stream, formerly worked for East Germany's spy agency, the Stasi, while Alexander Medvedev, the director of Gazprom Export, is widely believed to be a one-time member of Russia's secret service, the FSB.

"It's not a normal company in the European sense of the word," a senior EU official told EUobserver.

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