Merkel, Medvedev inaugurate new gas pipeline

[November 08, 2011]  LUBMIN, Germany (AP) -- The leaders of Germany and Russia are opening a euro7.4 billion ($10.2 billion) natural gas pipeline that links western Europe directly with Siberia's vast gas reserves.

Chancellor Angela Merkel and President Dmitry Medvedev met Tuesday in the village of Lubmin on Germany's Baltic Sea coast, where the 760-mile (1,200-kilometer) Nord Stream underwater pipeline reaches land.

French Prime Minister Francois Fillon and his Dutch counterpart Mark Rutte also attended the ceremony in a sign of the political importance of Europe's newest energy link, meant to strengthen the security of gas supplies.

The pipeline is to ferry the gas from Vyborg, near St. Petersburg in northern Russia, under the Baltic to Lubmin. That creates a direct link between the Russian and western European networks -- circumventing sometimes troublesome traditional overland transit routes through Ukraine, Belarus and Poland.

Once the project is complete, gas will flow to Europe through two pipelines. The first line, being inaugurated Tuesday, will have an annual capacity of 27.5 billion cubic meters.

That volume will double once the second line is completed -- expected next year. Nord Stream says it's the world's longest underwater pipeline.

Russia's Gazprom OAO holds 51 percent of Nord Stream, while German energy companies E.ON Ruhrgas AG and Wintershall AG each hold 15.5 percent. Dutch company Nederlandse Gasunie NV and France's GDF Suez hold 9 percent each.

Europe currently gets about 25 percent of its natural gas from Russia, which sits on the world's largest reserves. The gas is mostly ferried through Soviet-era pipelines crossing the Baltic states, Poland and Ukraine.

"Nord Stream improves the safety of our energy supply -- not only for Germany but for Europe as a whole," German Economy Minister Philip Roesler said before the opening.

The new pipeline received high-level political backing in Germany, and former Chancellor Gerhard Schroeder went on to work for the consortium building the pipeline after he left office in 2005. But officials in Poland and Ukraine, bypassed by the pipeline, have given the project at best a lukewarm welcome.

The new pipeline will undercut Ukraine's leverage in a long-running dispute about Russia's gas and transit fees.

When the long-simmering dispute between Moscow and Kiev escalated in 2009, Western Europe was taken by surprise as Ukraine cut off the pipelines, causing supply interruptions in the middle of the winter.

Building of the Nord Stream pipeline was started in April 2010. Each of the two pipelines consists of 100,000 steel pipes laid on the seabed.

[Associated Press; By JUERGEN BAETZ]

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