Gazprom Said to Seek Baltic Pipes From June Amid EU Criticism

  • Pipe deliveries for Nord Stream-2 set to start June-July 2016
  • Russia plans to start link in 2019 despite criticism from EU

Russia’s Gazprom PJSC will take delivery of as much as $3 billion of pipes starting as early as June as it pushes ahead with a natural gas link direct to Germany in the face of opposition from transit countries including Ukraine and Poland, according to two people with knowledge of the matter.

A project company called Nord Stream 2 AG started a tender for the pipes this month and may sign deals with the winners in February or March, the people said, asking not to be identified as the information isn’t public. Gazprom’s press service declined to comment.

The Baltic Sea link has faced criticism since the Moscow-based exporter signed in September an agreement on the project with five European energy companies including Royal Dutch Shell Plc and EON SE. The pipeline risks concentrating 80 percent of the European Union’s Russian gas imports on one route, European Energy Commissioner Miguel Arias Canete said this month.

The pipe-supply contracts would be worth as much as $3 billion, according to estimates by Oleg Petropavlovskiy, a BCS Financial Group analyst in Moscow.

Gazprom has previously ordered pipes for a link, only to see it scrapped over political issues, when Russian President Vladimir Putin canceled the South Stream pipeline through the Black Sea last year, citing EU opposition. Gazprom ordered pipes for the first line of the link worth about 1 billion euros ($1.1 billion) and has been paying to store them in Bulgarian ports.

2019 Start

The state-run gas exporter, which supplies about 30 percent of the EU’s gas needs, owns 51 percent in the Nord Stream-2 project and plans to start fuel deliveries in 2019. Shell, EON, BASF SE’s Wintershall unit and OMV AG hold 10 percent each, while France’s Engie SA owns the remaining 9 percent.

While the undersea route isn’t subject to EU energy rules, the bloc’s regulator may set limits for its overland connections in the region. Gazprom is currently able to use only 50 percent of the Opal pipeline in Germany linked to the working Nord Stream as EU rules demand third-party access.

The Nord Stream-2 investors need a clear framework on building the onshore network before starting construction on the offshore link, OMV Chief Executive Officer Rainer Seele said Oct. 6.

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