The Baltic Sea Gas Pipeline Seminar 18.6.2007

THE BALTIC SEA GAS PIPELINE

– a challenge to the EU and regional co-operation in the Baltic Sea area

This was the theme of a seminar that the Finnish-Russian Civic Forum arranged Monday 18th, 2007, in the Parliamentary building in Helsinki.

The seminar programme and a presentation of the speakers can be downloaded on this page.

The purpose of the seminar was to enlighten different aspects of this project; not only the environmental issues, but also political and security related impacts upon the regional co-operation in the Baltic Sea area and within the EU.

The first session was devoted to the pipeline project in view of international environmental and maritime agreements.

  • MP Valdur Lahtvee: Minutes   Audio
  • Dr Dirk von Ameln: Minutes   Audio
  • Councellor Seija Rantakallio
  • Dr Sampsa Vilhunen: Minutes   Audio
  • MEP Satu Hassi: Audio
  • Discussion during first session (Tapani Vaahtoranta, Jali Raita; Hassi, Rantakallio, von Ameln, Lahtvee):  Audio

The second session discussed the gas pipeline in view of future energy politics and economics.

  • Journalist Aleksandr Nikitin: Audio
  • Researcher Peeter Vahtra: Minutes  Audio
  • Discussion during second session (Zofia Grodzinska-Klemetti, Mikael Storsjö, Kirsikka Moring; Hassi, Nikitin, Vahtra, von Anelm): Audio

The third session ventilated the gas pipeline in view of overall security aspects in EU-Russia relations.

  • Dr Christer Pursiainen: Minutes   Audio1  Audio2
  • Director Kadri Liik: Audio
  • Dr Fraser Cameron: Audio
  • Discussion during third session (Zofia Grodzinska-Klemetti; Pursiainen, Hautala):  Audio
  • Grigori Pasko, preliminary screening of short film “Nord tream”:   Audio

On the Finnish version of this web site you find some video clips from TV coverage of this seminar: Web article in Finnish.

Dr Fraser Cameron has written some notes about the seminar. As his notes contains the main essence of the speeches and discussions, we include his notes here in slightly moderated format. Fraser Cameron’s notes.

Some further remarks upon the issue may be done.

Although the seminar enlightened many aspects of the Nord Stream project, there are still more questions than answers. The lack of transparency is a main feature of this project, and this deficiency raises many questions. The onshore pipeline in Russia has not been planned according to European environmental considerations. Russia hasn’t ratified the Espoo agreement and consequently follows this agreement only when it is advantageous; Russia does want to participate in Finnish projects close to the border, but don’t allow Finland any part in their own projects.

The price of the off-shore pipeline is quite a lot more expensive to build and maintain than an onshore pipeline. Who will pay the costs – Gazprom in form of smaller revenues or the European end-user? As Gazprom is in the process of monopolizing gas supply to Europe, there is no market price available, only monopolistic or oligarchical pricing, which always causes losses to the consumer, as it is well-known from economic theory and practice.

The argument of von Ameln, that the operational costs of Nord Stream would be cheaper than onshore because of a higher operational pressure is quite astonishing. The design pressure of Nord Stream is 220 bar. Maybe a layman could assume that the water pressure compensates internal pressure and thus allowing a higher pressure? Well, the average depth of the Baltic Sea is only 55 meters – at that depth the water pressure is only 5-6 bar, i.e. a small fraction of the internal pressure. High pressure pipelines could as well be built onshore, but you don’t do it because pumping stations at suitable distances are a cheaper solution than constructing high pressure pipelines.

How will Gazprom guarantee the gas supply? As it is well known, Gazprom has invested close to nothing in gas fields so far, their investments are directed to support political aims in other areas. Consequently, the gas production has been declining during last years. von Anelm refers to the rise of Gazprom’s stock price as an evidence of successful operations. This is not a true vision. The stock price has no connection to any increase in productivity, on the contrary. The stock price has been rising when Gazprom get governmental support on the road towards monopoly – the Sakhalin field was robbed from Royal Dutch Shell, the Anglo-Russian company TNK-BP was forced to sell Kovykta to Gazprom, etc. Gazprom Media’s seizure of several television channels, radio stations and publishing companies has probably also enhanced the value of the shares. (BTW, the Swedish Foreign Minister has gained personally more than 1 million euro upon the rise of Gazprom’s stock prices.)

Can Gazprom handle everything it steals, that is a most relevant question. Gazprom has two risks: operational and financial. Bellona has evaluated the operational risks in Shtokman – the main field for gas supply to Nord Stream – as so severe that gas won’t start flowing to the market until 2035 or beyond..

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