Russia, Germany start construction of gas line

9th December 2005, Comments 0 comments

9 December 2005, BABAYEVO, RUSSIA - Construction of Europe's longest gas pipeline began north of Moscow Friday, with Russian and German government officials attending the welding of the first section of the 2,100-kilometre export link.

9 December 2005

BABAYEVO, RUSSIA - Construction of Europe's longest gas pipeline began north of Moscow Friday, with Russian and German government officials attending the welding of the first section of the 2,100-kilometre export link.

Due to start pumping in 2010, the jointly-built North European Gas Pipeline (NEGP) will run a total 3,000 kilometres when connected to existing lines from gas fields in western Siberia.

It will primarily serve Germany, with planned branch lines to Scandinavia, the Netherlands and Britain.

"This is a great project, not just by Russian but also European standards," Russian Prime Minister Mikhail Fradkov said at a ceremony near the village of Babayevo, 400 kilometres from the capital.

"Our energy partnership with Russia is already a matter of course - the new pipeline will strengthen that," added German Economics Minister Michael Glos.

Costing more than 4.7 billion dollars, the NEGP will have a capacity of 27.5 billion cubic metres of gas a year.

The project also provides for the building of a parallel pipeline that would increase capacity to 55 billion cubic metres.

Construction costs are shared by the Russian state-controlled gas company Gazprom and Germany's E.ON-Ruhrgas and Wintershall, a subsidiary of the BASF energy company.

Bypassing traditional energy transit countries like Belarus, Ukraine and Poland, the NEGP will run under the Baltic Sea from near Vyborg in Russia to the coast of Germany near Greifswald.

While adding an estimated 2.4 billion dollars to construction costs, the offshore route eliminates transit fees and the risk of the supply being cut unilaterally amid disputes.

The Swiss-registered company which will operate the pipeline is 51-per-cent owned by Gazprom. The remainder is owned by E.ON-Ruhrgas and BASF.

Former German Chancellor Gerhard Schroeder will be appointed to the board of directors of the project to protect investors' interests, Gazprom CEO Alexei Miller said.

Meanwhile, Russia's Duma, or lower house of parliament, on Friday approved a bill easing restrictions on foreign ownership stakes in Gazprom.

Once it is approved by the Federation Council, the upper house of parliament, and by President Vladimir Putin, only 50 per cent of stock plus one share must remain in government hands.

At present only 20 per cent of Gazprom stock can be held by foreign investors.

DPA

Subject: German news

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