Report: Gazprom pushes ahead with Nord Stream 2 pipeline to Germany

MOSCOW, Nov 24 (PRIME) -- Russia’s state energy giant Gazprom is pushing forward with building controversial natural gas pipelines to Germany, calling for bids on the U.S. $11 billion project under the Baltic Sea, people familiar with the matter said, the Wall Street Journal reported on Thursday.

The two pipelines, known as Nord Stream-2, would bring a combined capacity of 55 billion cubic meters of gas and boost Germany’s importance as a transit hub for Russian gas into Europe. Nord Stream-2, a Switzerland-based wholly owned subsidiary of Gazprom, has issued tenders for laying pipes in shallow-water areas near landfall in Germany and Russia, the people said.

Gazprom referred questions to Nord Stream-2, which said the tender process was “continuing according to schedule” and declined to comment further.

The controversial project would help Russian gas bypass Ukraine, a former Moscow satellite that has moved closer to the European Union. Germany supports the pipelines, but the U.S. and some European Union countries have strongly opposed them as a Russian plan to deprive Kiev of gas transit fees and to limit Eastern European access to gas.

Gazprom has said it plans to fast-track the project so it is completed by late 2019. That is around the same time Russia’s gas transit contract with Ukraine expires.

The project hit an obstacle in August when Poland ruled that a host of European companies, including Royal Dutch Shell, were violating antitrust laws by collaborating with Gazprom on Nord Stream-2. The companies have said they still support the project, but are no longer joint-venture partners with Gazprom in Nord Stream-2.

European Union countries rely on Russia for 45% of their natural gas imports, a number that Brussels has pledged to lower by looking for fuel from other sources. Adding to tensions is a longstanding E.U. antitrust investigation into Gazprom’s practices that the two sides are trying to settle.

E.U. leaders such as Italian Prime Minister Matteo Renzi and Bulgaria’s Boyko Borisov have pressured German Chancellor Angela Merkel to scuttle Nord Stream-2. Merkel has stressed that pipelines could only be built if Gazprom assured that it would still ship significant volumes of gas via Ukraine.

In recent weeks, some E.U. leaders have said Nord Stream-2 shouldn’t go forward as long as Russia’s bombing campaign continues on Aleppo, Syria.

Germany’s Ministry for Economic Affairs and Energy said the Nord Stream bidding process was “running” and had to be carried out under German and E.U. laws. The European Commission didn’t immediately respond to a request for comment.

“Some E.U. members are putting up a serious fight, but I would be surprised if (Nord Stream-2) didn’t go ahead,” said Niall Trimble, managing director of the London-based Energy Contract Co. “Europe is skeptical about relying on more Russian gas, but this project has always been about changing the route of transit away from Ukraine, not upping exports.”

Nord Stream-2 would closely track an already existing pipeline known as Nord Stream. According to documents viewed by The Wall Street Journal, the pipeline would leave Russia at Narva Bay close to the Estonia border. It would travel under the Baltic Sea and make landfall in Germany at Lubmin.

Swiss-headquartered Allseas Group and Italy’s Saipem will bid on the project, according to people familiar with the matter. Shallow-water specialists such as France’s Technip and the three Netherlands-based companies Boskalis, Van Oord and Royal IHC are also expected to be involved in some capacity, the people said. The Russian landfall package is expected to include some Russian companies, the people said.

The bid submission date for the German landfall package is January 9, while tenders for the Russian side have to be submitted by January 30. Nord Stream-2 will award both packages by early April 2017, and both are expected to take about five to six months to complete.

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