As EU-Russian relations near an alltime low, the construction of the Nord Stream gas pipeline from Russia to Germany is the one positive example in cooperation between Europe and Russia, Konstantin Simonov, the general director of the Russian National Energy Security Fund, told New Europe.

“Nord Stream is an example of cooperation between Russia in Europe in all parts of this energy chain – upstream, middlestream and upstream. We see German companies in Yuzhno-Russkoye, we see (Russian gas giant) Gazprom in European downstream and also in middle stream because our partners will be not only (Germany’s) BASFand E.ON, our partners will be (Nederlandse) Gasunie and maybe GDFSuez,” Simonov said, adding that the project’s value in restoring EU-Russia ties is more important than its contribution to energy security.

Former German Chancellor Gerhard Schroeder, a poster child for Gazprom projects and the head of the Nord Stream AG joint stock company, last week spoke during a visit to the Russian coastal region of Kaliningrad on the benefits of the Nord Stream pipeline through the Black Sea. Nord Stream should be seen as part of European efforts to diversify the energy sector, he said.

Schroeder said European energy diversification efforts do not lie in a move away from Russian gas supplies, but through minimising the reliance on Ukraine as a transit nation. A good friend of Russian Prime Minister Vladimir Putin, Schroeder has been instrumental in pushing Nord Stream forward, convincing Brussels that the pipeline is not only a project between Russia and his native country Germany, but an EU-Russia pipeline that will contribute to the 27-country bloc’s energy security.

The project will connect the huge reserves in the large northern Russian gas fields (Yuzhno-Russkoye, Yamal, Shtokman) directly to the European market, and will provide an additional northern supply route for gas into the EU. Currently the world’s largest gas supplier, Russia supplies about 25 percent of the natural gas used in the EU and 80 percent of this gas comes through one import route via Ukraine.

Nord Stream would travel along a dual route along the floor of the Gulf of Finland and Baltic Sea to Germany. The primary source of gas for the first phase of Nord Stream is Russia’s Yuzhno-Russkoye field in the Yamal-Nenets region of West Siberia, which is being developed jointly by Gazprom and BASF and E.ON. “It is intended to supply gas to Nord Stream but only for Phase I,” Chris Weafer, chief strategist at Moscow’s UralSib bank told New Europe. Nord Stream Phase I will be 30 billion cubic metres and Phase II will add an additional 25 billion cubic metres so it will bring the pipeline’s capacity to 55 billion cubic metres.

“The additional gas will have to come from Yamal or Shtokman. But, right now the intention is that it will come from Shtokman,” Weafer explained. Simonov said the second stage of Nord Stream will be needed to bring new gas supplies from Russia’s massive gas field to Europe.

“The second stage is to build a pipeline from Shtokman. Of course, if you are talking about the second stage of Nord Stream it’s more logical to build this pipeline because it’s a very huge field and it’s possible to have a combination of exports. It’s possible to build LNG (liquefied natural gas) plant and it’s possible to build the pipeline,” Simonov said.

Weafer stressed that Gazprom needs to substantially increase its investment in new fields, particularly in Yamal, Shtokman and Kovytka in the Far East. Gazprom board chair Valery Golubev said on May 20 the construction of the ground section of Nord Stream is “entering the home stretch.” The Gryazevets-Vyborg pipeline, which is the ground section of the Nord Stream pipeline, is 917 kilometres, of which 597 kilometres run in the Leningrad region. Four compressor stations will be located in the region.

The maritime section of the gas pipeline will begin from the last of them, Portovaya, and run to Germany. “There is no doubt that the remaining 320 kilometres will be built by 2010 so that the gas pipeline could be commissioned by the middle of next year,” Itar- Tass quoted him as saying.

Meanwhile, Russian Energy Minister Sergei Shmatko said environmental issues might affect the Nord Stream project schedule. “We think that current processes related to the acquisition of permissions, including environmental ones, will be completed shortly,” the minister said during a video conference between Moscow and Berlin last week. “Nevertheless the Gazprom and Nord Stream companies are taking measures to make up for possible delays, I mean delays in full performance of work on the Russian side,” Shmatko said.

Criticising the project, Greenpeace officials said last week that increased gas exports through Nord Stream would result in more nuclear power plants in Russia, “New nuclear power plants will be built, because a significant amount of natural gas will have to be exported,” Ivan Blakov, a programme director at Greenpeace Russia said during a roundtable discussion hosted by RIA Novosti. “That’s an open secret — this much is evident from energy strategies and other official documents of the Russian Federation.”