Russia launches first gas link to W Europe

AFP/Vyborg, Russsia

Putin, flanked by Schroeder and Gazprom CEO Alexey Miller (right), visits the Portovaya compressor station’s dispatch centre outside Vyborg city, 130 km northwest of St Petersburg, Russia, yesterday

Russia yesterday inserted the first gas into a controversial undersea pipeline that for the first time will bypass nations such as Ukraine and deliver energy directly to Western Europe. The 1,220km Nord Stream project was agreed in 2005 by then German chancellor Gerhard Schroeder and Prime Minister Vladimir Putin – at that time serving as president – amid opposition from some other EU states. Both men’s attendance at the first gas ceremony in Vyborg outside his native home city of Saint Petersburg coincided with the second serious flare-up over energy prices between Moscow and Kiev since 2009. “The volume of gas (the link will eventually pump) is equivalent to the energy of 11 nuclear power plants,” Putin told Schroeder in reference to Germany’s recent decision to give its nuclear power programme by 2022. The launch saw operators begin filling the pipeline with “technical gas” – essential for creating the pressure to pump gas to its destination in Germany and eventually beyond. The first Nord Stream gas is expected to reach clients at the end of October or November while the second parallel link is expected to be completed by the end of 2012. Deputy Prime Minister Igor Sechin said the link’s total cost including financing adds up to €8.8bn ($12.5bn). Russia is responsible for about a quarter of the gas consumed in the EU and bills the Baltic Sea link as a guarantee against potential supply disruptions in transit nations with which it has rocky relations such as Ukraine. EU critics counter that this will only broaden Europe’s dependence on Russian energy and harm efforts to liberalise the continent’s energy market. Schroeder remains a champion of the project and now chairs the Nord Stream shareholders’ committee. Putin unexpectedly announced the impending “technical launch” of the pipeline on Monday during a regional party conference. “Gradually, in a calm manner we are departing from the diktat of transit states,” Putin said in a clear reference to Ukraine and the two neighbours’ latest dispute over prices. The Russian government said in a statement that its target list of nations for the new link includes Britain and France along with some other smaller EU states such as the Netherlands. It added that European gas consumption should grow in the coming decade by 200bn cubic metres per year – a jump of 50%. Nord Stream would account for 55bn cubic metres once its capacity doubles by 2013. Russia has long been seeking ways to move gas directly to the richer European nations while bypassing former ex-Soviet nations with which it has often unpredictable ties. But a similar project called South Stream that would run under the Black Sea to Bulgaria has encountered repeated delays and is not expected to ship its first gas until year-end 2015 at the earliest.Osaka Gas in talks for Aussie Ichthys stakeJapan’s Osaka Gas Co said yesterday it was talking with Inpex Corp about taking a stake in the Ichthys liquefied natural gas (LNG) project in Australia.The gas company will buy LNG from the field as part of any deal, said Kenji Kawamoto, executive officer in charge of overseas business development, as it looks to the growing number of upstream LNG projects in Australia.“We’re looking forward to reaching a set of deals of an equity stake and LNG purchase combined,” Kawamoto told Reuters in an interview.Inpex, Japan’s top oil and gas explorer, said last month that it was considering selling stakes in the Ichthys project to firms that buy LNG from the field.Osaka Gas, headquartered in Japan’s second city, has said it plans to raise its total LNG supply, both via contracts and stake holdings, to 10mn tonnes annually by 2020.That is less than one-third of a record 37.6mn tonnes of LNG Japan imported in the six months to June when power companies stepped up buying the clean fossil fuel after the nuclear crisis at Fukushima.In the financial year that ended in March, Osaka Gas managed 7.68mn tonnes, of which Indonesia accounted to 36%, followed by Malaysia and Australia.Kawamoto said the 2020 goal, set before the March disaster, aimed to meet growing demand in the company’s service area in western Japan and from its retail customers, such as electric power utilities.Kawamoto also said the company hoped a final investment decision will be made in 2013-14 on Woodside Petroleum’s Sunrise LNG project in East Timor.Osaka Gas has a 10% stake in the project, which plans to use a floating vessel for processing.“We’re suffering from birthing pains,” Kawamoto said, referring to a number of hurdles the field needs to clear including gaining approval from East Timor’s government.There was little prospect that Osaka Gas will raise its stake in Chevron’s Gorgon project in Australia, he added. The firm has secured to buy 1.375mn tonnes of LNG a year from the field, starting in 2014.It last week announced a plan to build in 2015 an LNG tank with capacity of 230,000 cubic metres, the world’s biggest LNG tank, replacing two tanks of 45,000 cubic meters each to be retired.Osaka Gas has spent half of a planned spending of ¥170bn ($2.2bn) over the five years to March 2014 in overseas energy development and downstream infrastructure business, he said.