Nord Stream, a $15 billion pipeline that would pump natural gas from Russia to Germany bypassing Ukraine, cleared its last major regulatory hurdles Thursday when Sweden and Finland both gave the green light to a project that could redraw the energy map of Europe.
The Swedish and Finnish governments issued statements saying they had granted consent to the Nord Stream AG joint venture to build offshore gas pipelines in the two countries' exclusive economic zones in the Baltic Sea. Denmark approved the project last month, and Russian and German consent, though still pending, is seen as a formality.
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Nord Stream could spell the end of Ukraine's status as a gas transit country. The European Union gets 80% of its Russian natural gas supplies via Ukraine, but the long-term viability of the route has been called into question by a string of disputes between Moscow and Kiev that led to cut-offs of gas to the heart of Europe.
Russia has sought to reduce its dependence on Ukraine by pushing two alternative export routes -- Nord Stream and South Stream, which would run under the Black Sea into southeastern Europe. Neither would go through Ukraine.
But Nord Stream faced big regulatory obstacles. Sweden's Environment Minister, Andreas Carlgren, expressed concern last year about the project's impact on the environment in the Baltic. Swedish officials said Nord Stream's initial application for a construction permit was incomplete and demanded additional information. In the end, it took Nord Stream 23 months to get consent.
The project would for the first time directly link Russia's vast gas fields in Siberia to the country's largest European customer, Germany. It will involve the construction of two pipelines, each 1,220 kilometers long, that would run from near St. Petersburg in Russia to Lubmin in northern Germany.
Construction is planned to start next year, with the first of two parallel pipelines becoming operational in 2011 and the second a year later. Ultimately, the line will have the capacity to pump 55 billion cubic meters a year to Europe -- enough to supply more than 26 million households.
Russia's Gazprom OAO (OGZPY, GAZP.RS) holds a 51% stake in the project, with German energy companies BASF/Wintershall AG and E.ON Ruhrgas AG each holding another 20% and N.V. Nederlandse Gasunie of Holland a 9% stake.