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Estos in the News
   
Baltic Pipeline Stalls 3 Years After Deal
By Judy Dempsey, New York Times
May 6, 2008

BERLIN — A pipeline that Russia and Germany want to build under the Baltic Sea is facing so much opposition and scrutiny that the pipeline company, Nord Stream, has yet to obtain a single construction permit from any of the countries surrounding the sea, according to government officials.

“There are serious environmental considerations that could affect the environment of the Baltic Sea,” said Marcin Libicki, the Polish chairman of the European Parliament’s Committee on Petitions. “Ideally, we would like the project to be scaled back,” he said before the committee was to meet again this week.

The committee examines petitions of European Union residents related to issues within the bloc. Last year, Mr. Libicki said, he received petitions related to Nord Stream supported by 30,000 residents, mainly from the Baltic States.

“There is real concern out about this pipeline,” he said. “And of course there are political considerations as well. It’s about Europe’s growing dependence on Russia for its energy.”

The project, one of the last big Russian-German ventures to be approved by the former German chancellor, Gerhard Schröoder, in late 2005, would reduce Russia’s dependence on transit countries like Ukraine and Poland. It entails the construction of an on-and-off-shore pipeline that for the first time would link Russia directly to Western Europe.

Dominated by Gazprom, Russia’s state-owned energy giant and including the German energy companies, BASF/Winterhsall and E.ON Ruhrgas, Nord Stream also is intended to meet Europe’s growing demand for natural gas.

Europe already depends on Gazprom for a quarter of its energy needs, while demand in the 27 member countries is expected to increase by 200 billion cubic meters to 536 billion cubic meters by 2015, according to the International Energy Agency in Paris.

But Nord Stream will meet only a fraction of Europe’s growing needs, supplying 55 billion cubic meters a year once the two parallel pipes are operating at full capacity by 2012, according to the company.

Then there is the political dimension. Critics of Nord Stream, whose board is led by Mr. Schröder, say 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.

Since the announcement of the pipeline deal nearly three years ago, Nord Stream has been beset by problems. It has been forced to alter the routes because of a boundary dispute between Denmark and Poland. It has been refused access to Estonia’s territorial waters. And last month, Nord Stream abandoned the idea of building platforms to support the pipes after objections, based on environmental considerations, by Sweden.

The costs have also increased, from around 4.5 billion euros, or $7 billion, to about 7.4 billion euros, according to the company.

The financing can only be finalized once the company has agreed on the final route with the countries bordering the Baltic Sea. They include Denmark, Finland, Germany, Russia and Sweden, which have to issue the permits, and four other countries, Estonia, Latvia, Lithuania and Poland. As yet, Nord Stream has received no permits to start laying the pipes in the Baltic Sea.

“Nothing has started,” said Sten Jerdenius, an energy specialist at the Swedish Ministry of the Environment. “All the investigations with regard to the environmental impact for the Baltic Sea are still ongoing. Not only that. We do not even have the information on alternative routes which we have kept asking Nord Stream for.”

Finland is also being cautious

“The tending process has not yet started,” said Seija Rantakallio of the Finnish Environment Ministry. “From our side, there is no official response to the project as such. An environmental impact assessment has to be made. It all takes time because this is an immensely complex project.”

The project also requires a go-ahead from the Espoo Convention, which sets out the obligations of parties to assess the environmental impact of certain activities at an early stage of planning. In practice, governments have to notify and consult each other on all major projects that are likely to have a significant environmental impact across national borders.

All the countries along the Baltic Sea are signatories to the convention, except Russia. But given Gazprom’s determination to build the pipeline and reduce its dependence on the transit countries of Ukraine and Poland, the company says it has gone out of its way to consult and be transparent.

“We have been transparent from the start,” a spokesman for Nord Stream, Jens Müller, said, adding that the company had invested a lot of time carrying out surveys, commissioning studies and conducting hearings. “Indeed, 100 percent in efforts would not be enough. We are aware of the environmental concerns. We have already spent 100 million euros on project planning related to the environment.”

Environmental organizations remain unconvinced

“The project is fraught with environmental problems,” said Jochen Lamp, chairman of the World Wildlife Fund, Baltic Program. “It will almost certainly happen but with delays and probably higher costs. We have to ask if it will be worth it.”

     
 
 
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