Nord Stream 2 Pipeline, Russia

Nord Stream 2

Nord Stream 2 is a new offshore natural gas pipeline being constructed to connect Europe to the world's largest reserves in Northern Russia.

The shareholders in the pipeline project are Gazprom (50%), BASF/Wintershall (10%), Engie (10%), E.On (10%), OMV (10%) and Shell (10%). A new entity, New European Pipeline, has been established in Zug, Switzerland, to develop the project and perform detailed project planning, permitting and survey work.

The budget for the construction of the pipeline has been estimated to be €8bn ($9.1bn) with 30% of the cost being funded by the shareholders and the remaining to be financed externally. It is expected to deliver gas to European consumers for at least 50 years and contribute to European energy security.

Nord Stream 2 is an expansion of the existing Nord Stream pipeline and is expected to supply energy to approximately 26m households a year. The energy delivered by the proposed infrastructure project will be equivalent to the amount of energy transported using between 600 and 700 LNG tankers.

The environmental impact assessment (EIA) process for the Nord Stream 2 pipeline began in April 2017 and is scheduled for conclusion by autumn 2017.

Nord Stream 2 pipeline route

Nord Stream 2 is planned to follow the route laid down by the Nord Stream pipeline and run through the Baltic Sea from the St Petersburg region (Russia) to Baltic Coast in north-east Germany.

It will supply gas from the vast natural gas field of Bovanenkovo in Northern Russia's Yamal Peninsula, which is estimated to have 4.9tcm of gas reserves. The pipeline will make a landing near Greifswald close to the German coast and will have no intermediate compressor station.

The pipeline will traverse the territorial waters of five countries, namely Russia; Finland; Sweden; Denmark and Germany.

Details of the gas pipeline

The 1,200km pipeline will comprise twin-parallel lines running offshore on the bed of the Baltic Sea. With a total capacity of 55bcm of natural gas a year, the pipeline will be able to cover one-third of the new gas imports required in the next two decades.

The two pipelines of the Nord Stream 2 will have a capacity of 27.5bcm a year and will comprise 12m-long individual pipe joints. Each pipeline will be made of 100,000 coated steel pipes with 24t in concrete weight. Internal diameter of the pipeline will be 1,153mm (48in) and the wall thickness will be 41mm.

Marketing of gas

Gas from the pipeline will be transported to different markets within the EU. It is expected that nearly one-third of the gas reaching Germany will be transported to North-Western Europe via existing hubs. The remaining gas will be supplied to central, eastern and southern Europe and will add to the Central European Gas Hub in Baumgarten, Austria.

Pipelaying of Nord Stream 2

Specialised vessels will be used for laying the pipe and handling the overall welding and pipe laying process. Concrete weight coating and interim pipe storage facilities will be set up on harbours located at the Baltic coast to provide logistics support.

Nord Stream 2 pipeline project timeline

Work on the feasibility study and preparatory stages of the project commenced in 2011, which was followed by the publication of the project information document in 2013.

"It is expected to deliver gas to European consumers for at least 50 years and contribute to European energy security."

A shareholders agreement was signed in September 2015 by the participating entities. Delivery of the pipes was completed by November 2016. Surveys and engineering works are ongoing and are planned to be completed by mid-2017.

Construction of the twin lines is expected to be completed by 2018 and 2019 respectively with operations set to begin by end of 2019.

Contractors involved

Contracts were awarded to Europipe, Mülheim, United Metallurgical Company, Chelyabinsk Pipe-Rolling Plant and Chelyabinsk to supply steel pipes for the two pipelines. The contract includes the delivery of 2,500km of large-diameter pipes weighing approximately 2.2Mt.

Allseas was awarded a contract by Nord Stream to perform offshore pipe-lay works for the pipeline project, in February 2017.

Wasco Coatings was contracted to provide concrete weight coating services and pipes for Nord Stream 2 project.

Controversies around Nord Stream 2 pipeline project

The project has been surrounded by controversies since its inception. Ukraine has filed a lawsuit with the Energy Community Secretariat seeking action against the construction of the pipeline. It has also appealed to the European Commission to terminate the gas project as it is against Ukraine's interest. The route of the pipeline circumvents certain nations such as Ukraine, which stand to lose high-transit fees.

The governments of ten European countries sent a letter to the European Commission stating that the pipeline project is against the interests of EU. The countries involved are Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia.