Official: Nord Stream gas pipeline ‘on right track’

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The Nord Stream gas pipeline project has just taken an important step by publishing its environmental assessment report and construction can begin in early 2010, Sebastian Sass, head of Nord Stream’s EU representation, told EURACTIV in an exclusive interview.

In addition to heading Nord Stream’s EU representation, Finland’s Sebastian Saas is also his company’s spokesman for the EU and issues related to his country’s participation to the project. 

To read a shortened version of this interview, please click here.

The Nord Stream gas pipeline project has been less in the public eye, at least in Brussels, compared to other projects like Nabucco or even South Stream. What’s the state of play with Nord Stream, and especially in the context of the recent gas crisis? 

We have made very good progress. From 9 March, we have provided an environmental assessment report, which covers the whole pipeline. The report is public and can be found in the project’s webpage. The assessment report itself is very big, it’s thousands of pages long, but we have also provided a summary, more understandable for the general public. 

Making this report public means that we are going into the public participation and consultation procedure. We will hear back from the general public, from experts, from the administrations, what they think about our environmental work: is it enough? Are there certain things missing? Should we do more in certain areas? 

In the countries from which we need permits, we need to fulfill environmental legislation. As far as the gas crisis is concerned, certain attention has been focused on our project and other projects, which increase security of supply. In term of decision-making procedures, we need permits from five countries. They have legislation on how these procedures go and they will be applied. 

Sometimes even one permit can take ages to obtain… 

I think it will happen relatively quickly, that we will be able to construct. We have been consulting with all nine countries around the Baltic Sea for exactly three years. And now that we have provided the most comprehensive environmental study that’s ever been conducted in this region before, I think we are showing that we are able to fulfill the legislative requirements to construct the pipeline. 

In the countries concerned, there are procedural rules, which give an indication how long the procedure will take. The procedure of public assessment of the environmental report will end by the end of summer, after which we will be in the phase of getting permits from the countries we need permits from. The permit applications will be filed at the same time. 

In most countries, we need one environmental permit, but in some countries it’s two. According to our consultations with the administrations around the Baltic Sea, we should be able to conclude these permit procedures, so we can start constructing in early 2010. 

You sound very confident. 

You might be surprised we are so confident. But we are not surprising anybody here, we have been engaging for many years with the administrations we need permits from. We know the procedures, they know us, we have provided draft materials, so I think we are well prepared. 

There seem to be other problems than environmental ones, such as the remains of Russian submarines on the seabed, which are seen as war graves not to be disturbed, or security or military aspects, or fears from some countries such as Estonia that construction will be used as a pretext for gathering intelligence on the resources in its continental shelf. How do you expect these problems to be overcome? 

I see what you refer to. Yes, we are taking this into account. Building on the Estonian side was denied to us for the reasons you just mentioned. So that’s not an issue anymore, we will not be constructing on the Estonian side. 

There was also a discussion on security policy in Sweden. Some people were very critical that we had plans to build a maintenance platform close to the island of Gotland. So we found a technical solution to be without this. 

In 2007, there was a lot of discussion on whether we are transparent enough. We have since then developed, to be very transparent. Any material on us that can be made public can be found in our webpage. But with any large project, you will always have discussions on elements which you, as a project developer, don’t see as the business you are in. 

We are not in security policy, we are providing infrastructure. But at the end of the day, what matters is do you fulfil the legal requirements. 

You mentioned your website, which carries a lot of positive messages, such as ‘the project is attractive to investors’. What’s the situation with financing the project? Do you expect EU funding? 

The project is all private. We haven’t, at any point of time, applied for any public funding. We have been planning all along that we will finalise the negotiations this year on loans, so at the end of 2009 this should be settled. We are providing a rather safe return on investments, being an infrastructure project where you can clearly see that there is a need for it. 

Doesn’t the economic crisis affect you? 

Well, at the moment, we have no problems securing interest from investors. Of course, if you look at commodity prices, they are not what they were last year. And of course, we need to take a close look at what the development is in terms of interest rates, or liquidity of banks. But if we look at the interest of investors, we are regarded as a top industry which is safe. 

You are not applying for funds from the European recovery plan, like Nabucco is doing? 

No. But this is a recovery plan: it means that these are projects in trouble financially. We haven’t experienced that. 

So you are describing your Nabucco colleagues as a project in trouble? 

No, I’m not in position to call them so. 

But you just did. 

I was only referring to the criteria for the recovery plan. Every project can decide under what conditions it makes sense to apply for public funding. We haven’t found it necessary for us. But again, I’m not in a position to judge Nabucco’s decisions. I’m not even particularly informed what their motivation is. 

Are you more familiar with South Stream? 

Not in great detail, because it runs completely separate from us. 

You don’t consider it a sister company? 

No, actually. In terms of practical cooperation, we are completely independent, and it’s a different set of shareholders. There is also a different history of the projects, and no actual cooperation between us. 

Nord Stream appears to be the first big pipeline project to see the light.

It seems so. At least, we are very far advanced. 

How much are you under political pressure? Nord Stream bypasses Ukraine and will make this country more vulnerable to pressure from Moscow. Do you get blamed for this? 

First of all, the project is not bypassing anybody. It’s a stand-alone project, which was not designed in order to avoid anybody. The project goes back to the 1990s. It was drawn up by a Finnish-Russian corporation called NordTransGaz, which was located in Finland and was 50% Finnish and 50% Russian. Back then, it had the explicit task of developing an offshore route between Russia and Germany. 

This was long ago. Any discussion concerning Ukraine you are referring to was debated. Back then, it was judged already that this route would make sense, for environmental, technical and commercial reasons. And this is the reason why since 2006 we are a European Union priority project, a project of European interest, which is the highest priority level. And I don’t think we are undermining European solidarity. 

Nord Stream has not been set up to replace any supplies through any other countries, and is not able to do that. It was set up for additional supplies, not to replace anything. Also, two of our shareholders are German, each with 20%, and they are receiving gas from Ukraine. But they need additional supplies. They are not interested in investing billions of euros into Nord Stream in order to get the same amount of gas through another channel. What they want is additional gas. 

Through Ukraine, 140 billion cubic metres a year of Russian gas are transiting. Nord Stream will be providing 55 billion. So even technically, we could not replace that. 

How can you describe the role of Gazprom in the project? 

Gazprom is our majority shareholder, with 51%. It is a shareholder acting like the others. 

What is overlooked by the public is that Gazprom itself has financial difficulties. Gazprom also needs Western technology. This project probably goes in this direction. 

We have shares from three countries: Russia, Germany and Holland. All of them have a lot of experience with different types of pipelines, including offshore pipelines. As for the Gazprom financial situation, I’m not a Gazprom spokesperson, but from the same sources as you, I know Gazprom is cutting down investment, but this does not concern Nord Stream. The same applies to our German and Dutch shareholders. 

I know also that Gazprom, irrespective of the financial crisis, has a lot of projects going on with Western companies. If you look at the Shtokman gas field, 800km north of Murmansk, which is likely to be one of the sources for our pipeline, it’s been exploited 51% by Gazprom, the other 49 being shared between Total in France and StatoilHydro from Norway. So you can see there is a knowledge transfer going in both directions. And our project is a facilitator. 

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