Nord Stream Broadens Europe's Gas Supply
8. Juni 2011
From the effects of the recent events in Libya and Japan, to the financial crisis, the global energy landscape is constantly changing, influencing both energy demand and supply flows globally. Energy policy needs to adapt if it is to continue to provide citizens with long-term sources of energy supply, and the development of new infrastructure projects is crucial in this dynamic landscape. Increased awareness to combat greenhouse emissions and climate change also continue to play a key role in shaping energy policies globally and at EU level.
Author: Matthias Warnig, Managing Director of Nord Stream AG
This is the context in which European energy security of supply should be examined. European energy policy ranks security of supply as one of its most important goals, alongside CO2 emission reduction objectives and European competitiveness. The promotion of energy infrastructure projects that ensure long-term reliable energy supplies is therefore a vital tool in achieving the EU's energy aims, particularly for gas supply.
Bridging the Supply Gap with Gas
Europe's long-term energy mix is rightfully being considered in the context of security of supply, and here too the role of natural gas is important. As Europe looks to developing further renewable energy supplies, gas pipelines can act as a foundation on which to build tomorrow's energy capacity. Natural gas is a versatile fuel that can bridge the supply gap caused by intermittent renewable energy supply much more easily than other fossil fuels or nuclear power. In addition, natural gas generation today has an efficiency of 60 percent, compared to 45 percent for modern coal power plants, with 50 percent lower CO2 emissions. Therefore, policy makers across the EU, along with non-governmental organisations, such as Greenpeace, have recognised the important role that gas will play in achieving Europe's ambitious CO2 emissions reduction targets.
A Project of European Significance
The Nord Stream Pipeline system has been considered a European priority project under the EU's TEN-E guidelines since 2006. The Nord Stream system ‒ comprised of two, 1,224 kilometre pipelines that run parallel through the Baltic Sea ‒ will bring 55 billion cubic metres of gas a year to Europe. That is enough to supply 26 million European households.
Bringing Russian Gas to Europe
Nord Stream will transport gas directly from Russia, home to some of the world's largest gas reserves, to those European countries where demand is growing most quickly: Germany, the United Kingdom, Denmark, the Netherlands, Belgium, France and the Czech Republic, with supply also reaching other Member States of the EU. As Europe's domestic gas supply depletes, Nord Stream will fill a crucial gap in the market, while also providing an additional supply route to increase security of supply, and ensure long-term access to Russian reserves for European consumers.
European-Russian Partnership Benefits Both Parties
Nord Stream is also a significant step forward in the strategic EU-Russia partnership. Russia has been a reliable energy supplier to Europe for 40 years, and the construction of a new transport route will build on that relationship to secure additional supplies for Europe when they are most needed. It is often forgotten, though, that Russia needs reliable customers for its gas as much as Europe requires long-term supply security. And whilst other sources of gas are available, unconventional gas is unproven in Europe and may be prohibitively difficult and expensive to extract on a densely populated continent, whereas LNG is flexible but is easily diverted to other countries or regions that are prepared to pay higher prices. In contrast, the certainty of pipeline delivery and the resulting European-Russian interdependence benefits both parties.
Construction Progresses on Schedule
The construction of the Nord Stream pipeline is well under way. The first of two parallel pipelines was laid at the beginning of May. It was laid in three sections, which will be connected underwater. Following successful pressure testing, the first connection was completed at the end of May, and the final connection will take place in June. Construction of the second line began on schedule in May.
Financing for the Nord Stream Project Is Secured
Despite the current situation in the financial markets, which has made accessing capital for many major infrastructure projects difficult, Nord Stream has successfully completed its financing, demonstrating the confidence the markets have in the economic soundness of the project.
Linking Consumers with Suppliers
I firmly believe that the EU's energy security goals will only be achieved by projects that enable long-term access to natural resources. Russia will remain Europe's main partner due to its vast natural gas reserves and Europe's growing gas consumption, combined with the potential for gas to contribute to CO2 emission reduction targets. By building a new connection to natural gas reserves, Nord Stream is an integral part of this effort, bringing consumers and suppliers closer together.
