Putin welcomes new partners to North European gas pipeline

Moscow (Platts)--2Nov2005

Russia is welcoming new partners to take part in the North European gas
pipeline project set to provide a new export route for Russian gas to northern
Europe, Russian president Vladimir Putin was quoted Wednesday by Russia's RIA
Novosti news agency as saying in the Hague.

     Any decision to include new partners, however, would depend on other
participants in the pipeline venture, Putin said.

     "This project is much more ambitious than a simple construction of a
pipeline across the Baltic Sea floor," Putin said during his visit to the
Netherlands. "It includes the construction of additional storage facilities in
various European countries, including the Netherlands, and the construction of
additional communication lines on the bottom of the Baltic Sea, possibly,
linking the Netherlands and other countries, including the UK." 

     He said Russia has received proposals from Dutch partners which will be
studied "thoroughly." 

     Russian natural gas giant Gazprom and German energy companies BASF and
Eon signed an agreement on the North European gas pipeline in early September.
The 1,200-km pipeline will run from Vyborg on Russia's Baltic coast to
Greifswald on Germany's northeast Baltic coast. Offshoots may then be built to
link it with Russia's exclave in Europe, the Kaliningrad region, Finland,
Sweden, Denmark and the UK.

     The line is planned to start operating in 2010 with a single pipeline
able to transport about 27.5-bil cu m annually. The project also envisages
laying a second pipeline and doubling the transmission capacity to about 55
Bcm/yr. The total investments for the two pipelines are to exceed Eur4-bil.

     The parties to the agreement intend to set up the North European Gas
Pipeline Company to operate the project, with Gazprom holding 51% and BASF and
Eon holding 24.5% each.

--Nadia Rodova, nadia_rodova@platts.com

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