Offshore gas pipeline
Nord Stream 2 is a 1,200km-long offshore natural gas pipeline being constructed to connect Europe to the world’s largest reserves in Northern Russia. Russia’s state-owned Gazprom will own and operate the pipeline through its wholly-owned subsidiary Nord Stream 2.
The budget for the construction of the pipeline was estimated to be €9.5bn ($11bn), with Gazprom investing more than half, and the remaining to be financed by Engie, OMV, Royal Dutch Shell, Uniper, and Wintershall.
Nord Stream 2 is an expansion of the existing Nord Stream pipeline and is expected to supply energy to approximately 26 million households a year, with a capacity of 55 billion cubic metres. The energy delivered by the proposed infrastructure project will be equivalent to the amount of energy transported using between 600 and 700 liquified natural gas (LNG) tankers.
Scheduled for the commission in 2019, the new pipeline is expected to deliver gas to European consumers for at least 50 years and contribute to European energy security.
Nord Stream 2 will 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 4.9 trillion cubic metres (tcm) of gas reserves. The pipeline will make a landing near Greifswald close to the German coast and will have no intermediate compressor station.
The route will traverse the territorial waters through the Exclusive Economic Zone (EEZ) of five countries including Russia, Finland, Sweden, Denmark, and Germany.
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 each and will comprise 12m-long individual pipe joints. Each pipeline will be made of 100,000 coated steel pipes with 24t in concrete weight. The internal diameter of the pipeline will be 1,153mm (45in) and the wall thickness will be 41mm (1.6in).
Gas from the pipeline will be transported to different markets within the EU. It is expected that approximately 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.
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.
A shareholders agreement was signed in September 2015 by the participating entities. Delivery of the first pipes for the project was received in Germany in November 2016.
The project received construction approvals from Russia, Sweden, Finland, and Germany in August 2018. Denmark’s objections led Nord Stream to withdraw its original proposal, later proposing two new routes. The Danish Government accepted the second of these in 2019.
The offshore construction works for the pipeline started in the Gulf of Finland, with the use of pipe-laying vessel Solitaire from September 2018.
Kvaerner was awarded a contract worth $73m in 2017, for the civil, mechanical and piping works for onshore facilities at the export landfall of the pipeline in Russia.
Europipe, Mülheim, United Metallurgical Company, Chelyabinsk Pipe-Rolling Plant, and Chelyabinsk were awarded contracts to supply steel pipes for the two pipelines in March 2016. 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-laying works for the pipeline project in February 2017. The contract also includes the provision of pipe-laying vessels, Solitaire, Pioneering Spirit, and Audacia.
Wasco Coatings Germany was contracted in September 2016 to provide concrete weight coating services and pipes for Nord Stream 2 project. In June 2017 Blue Water Shipping was awarded a $46m sub-contract by Wasco Coatings for handling, storage, and transportation of the pipeline segments.
Bokaalis-Van Oord was awarded the $291m rock placement contract for the Nord Stream 2 pipeline project in July 2017.
Saipem has been awarded the contract for providing the pipe-laying vessel C10, to be used during the construction of the pipeline.
The project has been surrounded by controversies since its inception. Ukraine filed a lawsuit with the Energy Community Secretariat seeking action against the construction of the pipeline. It 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 the EU. The countries involved are Bulgaria, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia.
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