Baltic pipeline to see Gazprom bypass Ukraise to Germany

Plans for a gas line across the Baltic to allow Russian gas to be distributed to Western Europe have been announced by Germany’s Chancellor Gerhard Schroder and Russia’s President Vladimir Putin.

Gazprom and Chemical giant BASF are the lead players behind the proposals. They plan to build the so-called North European Gas Pipeline which could cost an estimated $8 – $10 billion when complete. Work on the pipeline, which would link Vyborg, near St. Petersburg, with Greifswald on the northeastern coast of Germany, is due to start late this year. It is scheduled for completion in 2010. Wintershall, BASF’s energy unit, will hold a 49% stake in the pipeline and Gazprom the majority share in the project which, according to media reports, will have an annual capacity of about 30 billion cubic metres.

The move will allow energy giant Gazprom to deliver gas directly to market and reduce its dependence on traditional transit routes through Ukraine and Belarus.

Russia already supplies close to a third of Germany’s energy needs and around 20% of EU requirements and the move is likely to give Gazprom an even larger foothold in the European energy sector.