Finland gives final nod to construction of Nord Stream II

Finland gives final nod to construction of Nord Stream II
Concrete weight coating of Nord Stream 2 pipes in Kotka, Finland
By bne IntelliNews April 13, 2018

Finland has issued a second and final permit for the construction of the controversial Nord Stream II pipeline that is to pump gas from Russia directly to Germany via a Baltic Sea route, the Regional Administrative Office of Southern Finland said on April 12.

The permit for the pipeline developer Gazprom means a step forward for the infrastructure that is opposed by Poland and other countries in Central and Eastern Europe.

They claim Russia will use the new gas route – which will double the transmission capacity to Germany to 110bn cubic meters – to curb sending gas to the region via Ukraine. That appears a plausible scenario, given that Russia will be able to send some 80% of its gas exports to the EU via the combined capacities of Nord Stream I and Nord Stream II.

That, in turn, will mean Kyiv loses valuable transmission fees, adding to Ukraine’s economic and political woes. The CEE countries are also wary that Nord Stream II will hand Russia a good opportunity to exert further pressure on them by threatening cuts to gas supplies.

The CEE region has long not trusted Gazprom, alleging it has for many years abused its dominant position to keep prices high and block the development of a competitive regional gas market.

Countries like Poland or Lithuania are therefore developing alternative gas delivery options. Poland has a long-term contract with Qatar for LNG supplies and is about to start building the Baltic Pipe, a pipeline for Norwegian gas. Lithuania also has an LNG terminal and has been working with neighbours Latvia and Estonia to establish a common gas market.

It is Ukraine, however, that stands to face the biggest problem if Gazprom does decide to reduce gas transmissions through its territory.

German Chancellor Angela Merkel has, however, this week assured the Ukrainian President Petro Poroshenko that the “Nord Stream II project is not possible without clarity on the future transit role of Ukraine,” Reuters reported.

The Finnish permit concerns the routing of the pipeline through Finland’s territorial waters. A similar permit was granted earlier by Germany for its territorial waters, with Sweden and Denmark still working on issuing their permission.

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