Russia to bypass Ukraine with Nord Stream

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Russia to bypass Ukraine with Nord Stream

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There was a big slump in demand for Russian gas in Europe last year partly due to the economic crisis.

However the Russians have said they have contracts or binding obligations for all of the gas that will flow through the Nord Stream pipeline on which construction has just been launched.

To be completed in 2012, the dual pipeline will cost 7.4 billion euros. Deliveries will start through one pipe next year.

The full capacity will be up to 55 billion cubic metres of gas per year.

Russia’s Gazprom owns half of the project, the other partners are BASF’s Wintershall and E.ON from Germany as well as Dutch firm Gasunie.

This is Russia’s biggest post-Soviet gas pipeline and means it can avoid transiting through Ukraine with which it has rowed over prices and transit terms.

That led to a halt in Russian gas supplies to Europe for almost two weeks in early 2009.

Differences with Ukraine encouraged Moscow to speed up this project, as well as another major pipeline called South Stream.