[Oilguy]

SITUATION: Russia has succeeded in getting funding for the Nord Stream gas pipeline (formerly North European Gas Pipeline, NEGP), which will go under the Baltic Sea to Germany. It obtained environmental approvals from the littoral states concerned rather easily and earlier this year began to lay the pipes undersea.

ANALYSIS: The deal is another indicator of ever-growing German-Russian cooperation and reorientation of German diplomacy, even as this takes place against the interests of Germany’s EU partners.

• Russia obtained funding from European financial institutions with surprising ease. It was accomplished through Germany’s lobbying of the EU to include the pipeline as a “project of European interest” within one of the Trans-European Energy Network corridors. That designation was then regarded as a political seal of approval. Once it was accomplished, the littoral states of the Baltic Sea, through whose waters the pipeline must run, treated their national approval of the rights-of-way as a purely administrative issue and issued the requisite permits in due course.

• The German companies BASF SE/Wintershall Holding GmbH and E.ON Ruhrgas originally held the remainder in equal shares but were forced by Gazprom (which refused to give up any pat of its majority 51% stake) to dilute their participation when they wanted to bring in two French firms. Now the two German firms each hold 15.5%, while Gasunie and GDF Suez each have a 9% share. The German metallurgical industry also gained from the deal, because only Germany possesses the industrial process technology and skilled labor necessary for manufacturing the pipes to the exacting technical specifications required.

• In the winter months of January 2006 and March 2008, due to disputes between Gazprom and Naftohaz Ukrainy, Russia had decreased supplies to Ukraine, through which gas transits to Europe. The Nord Stream pipeline is designed to circumvent dependence upon Ukraine for transit of Russian gas to Europe. Also Germany is even using trying to use EU regulations to block Poland’s intended construction of a terminal for liquefied natural gas (from Qatar) that would be in competition with Russian gas resold by Germany.

BOTTOM LINE: What Germany gains economically from the deal (besides what former chancellor Gerhard Schroeder gained personally after jumping, literally weeks after leaving the country’s highest political office, to head the Shareholders Committee of Nord Stream, which his government had strongly supported) is to become sole supplier of Russian gas to Central and Northern Europe. There is, however, a deeper significance. Thus, for example, Germany plans to sell to Poland, from the west, the gas that it is accustomed to receive from Russia, to the east. Belarus would also be affected, in addition to Ukraine.

Germany and Russia have a long tradition of diplomatic cooperation, from the three partitions of Poland (late 18th century), through the coalitions against Napoleon (early 19th) and the Three Emperors’ League (late 19th), to the Rapallo Treaty (early 20th), to mention but a few of the more notable points. Even during the Cold War, the USSR had deep relations with East Germany, its Warsaw Pact and COMECON ally. The KGB service of current Russian Prime Minister Vladimir Putin in the German Democratic Republic is a living reminder of those relations.

Today Germany far outstrips other European countries as an importer of Russian goods, and occupies first place in foreign direct investment of capital in Russia, recalling the Tsarist period. Germany’s recent energy-industrial cooperation with Russia reaches back into the late Brezhnev era of the Soviet regime, but the present deepening of Germany’s special relationship with Russia accentuates the post-Cold War dynamics of international relations in Europe.

With the relocation of its capital eastward from Bonn to Berlin, the Federal Republic of Germany began to think, and has lately begun to act, more as a traditional Central European power, and less as the pillar of European integration that it was during the Cold War. This is also evident in the recent hesitation by German financial elites - and the outright refusal of the country’s political elites - to underwrite any bail-out for Greece or any other EU member, or indeed any assistance mechanism for the European debt crisis in general. The post-Cold War phase of Germany’s energy cooperation with Russia expresses that evolution.

Source: http://www.globalintelligencereport.com ... -under-way

[Mesuge]

Udpate: yesterday huge milestone reached, first pipeline (out of 2 in total)
1,224km rests on the Baltic's bottom. They expect the first real shippment of gas inside the tubes around Q4/2011.
http://www.oilandgaseurasia.com/news/p/0/news/11312

[radon]

Gazprom advances in Europe

Russia redrawing Europe energy map
By M K Bhadrakumar

Things couldn't have been better for Russia's energy giant Gazprom even before news came in over the weekend that curtains could be coming down on one of the keenest battles of the Caspian great game, and Moscow is on a winning streak.

...

Gazprom operates gas storage facilities in Austria and lease facilities in Britain, France and Germany. This work is in anticipation of the vastly increased flow of Russian gas through the new pipeline systems known as South Stream and North Stream, which are becoming operational in the very near future.

The increased storage facilities in Austria will cater to the markets in Slovenia, Croatia, Slovakia, Hungary, Germany and Italy. ...


Nabucco on backburner
When good news come, it comes in battalions. The latest heartening news for Gazprom is that the Nabucco natural gas pipeline, the pet project of the United States' Caspian energy diplomacy that aims at reducing Europe's energy dependence on Russia, has suffered a considerable, and potentially lethal, setback.

...

To be sure, the setback for Nabucco works as Russia's gain.
...

At the signing ceremony in Moscow, Putin said, "The move indicates stability and is crucial for the entire energy market." He welcomed Germany's support for the market, "including the position of Chancellor Angela Merkel". Russia's "German connection" is almost entirely the personal handiwork of Putin's untiring diplomacy. ...

Russia can now be expected to go for the kill and bury Nabucco once and for all by negotiating more contracts for additional gas supplies to Europe over the next two years. South Stream and North Stream are poised to redraw the energy equations between Russia and the European countries.

US rallies "New Europeans"
...

South Stream and North Stream have trivialized the United States' policy to fuel the latent feelings of antipathy among the Central European countries toward Russia, a policy that dates back to the late 1990s. President Barack Obama is expected to visit Warsaw later this month. The London Telegraph reported on Tuesday that Obama will confirm the deployment of F-16 aircraft in Poland as a mark of direct US guarantee in addition to the North Atlantic Treaty Organization for the country's defense.

...

Clearly, the US realizes that energy is the lever with which Russia is undermining its strategy. ...

From all perspectives, what emerges is that Nabucco's promoters are stoically adapting themselves to the realities of an increasingly volatile global energy marketplace, shaken up by multiple factors such as the prospect of shale gas production, the upheaval in the Middle East and of course the killer tsunami in Japan that puts question marks on nuclear power. And the advantage goes to the Russian bird. The Europeans cannot but appreciate that it is better to keep it than hanker for two American birds in the bush.
...

http://www.atimes.com/atimes/Central_Asia/ME12Ag02.html

[Mesuge]

And don't forget that Serbia has been included into the South stream project, so another aspect in the game, as both camps are playing the card, plus their aspiration joing the EU and the narco-human organ smuggling enclave backed by NATO in Kosovo etc.

basics described from the "western" perspective
(there are more recent news though):
http://www.acus.org/new_atlanticist/pip ... erbia-deal

[sparky]

.
Beside the political interests there is some very very good reasons for Russia
to implement north stream ,Ukraine is the biggest consumer of Russian gas , they are quite greedy for it
not only do they get a heavily discounted price but the transit fees are paid in gas ,
http://www.gazprom.com/f/posts/45/41087 ... -trend.jpg
same for the rather erratic Byelorussia and frosty Poland ,
with Russia internal consumption rising there is scarcely enough to go around .
North Stream will enable Russia to sell more gas to fully paying customers without having to suffer blackmail threats , and Gasprom will be able to ratchet the price up to international value

"Gazprom continues to adjust the existing agreements with the CIS in a stagewise manner in order to completely move to contractual terms and conditions, and pricing mechanisms similar to those effective in the European countries starting from 2011. The natural gas pricing formula agreed on with the Baltic states and applied to gas payments clearing in the region during 2008–2010, maintains the supply profitability in Gazprom on the level that is equal to the European one as well as assures faithful prices for consumers."
http://www.gazprom.com/marketing/cis-baltia/

It's a sweet deal , totally opposed by Washington , it will see Ukraine , Byelorussia Poland lose their strongest card against Germany and Russia , South Stream is not so advanced but will do the same for Romania