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Saturday, December 10, 2005

Gazprom Begins Construction of Controversial Baltic Gas Pipeline

09.12.2005 MosNews - On Friday, Dec. 9, Russia's natural gas monopoly Gazprom began official construction of the 1,200 kilometer (744 miles) pipeline that will deliver Russian gas to Germany and other European nations via the Baltic Sea, bypassing transit countries such as Ukraine, Poland, and the Baltic states. The pipeline is due to become fully operational by 2010. The launch ceremony is to be attended by Russia's Prime Minister Mikhail Fradkov and Germany's Economy Minister Michael Glos. The ceremony will include the symbolic welding of two pieces of pipeline. The pipeline will link the Russian port of Vyborg and the town of Greifswald in north-eastern Germany. The North European Gas Pipeline has already stirred a lot of controversy in transit countries, such as Poland and Ukraine, prompting concern that Russia's neighbors will eventually be cut off from Russia's gas supplies. MosNews has reported on previous occasions that Poland has called the pipeline plan a "conspiracy" against its interests, while the Baltic states offered their own pipeline project and cited environmental concerns trying to prevent Gazprom's project from starting. The $5 billion pipeline deal was struck between Russia and Germany this September, just before German Chancellor Gerhard Schroeder lost power. Germany, Europe's biggest economy, relies on Russia for a third of all its oil and gas imports, with the rest of Western Europe importing one quarter of its gas needs from Russia. Gazprom has signed a partnership for the project with Germany's BASF and E.ON. The Russian giant has a 51-percent stake in the North European Gas Pipeline Company, while German firms each have 24.5 percent stakes. Gazprom has said that it may take a third partner into the project, thus reducing the stakes of BASF and E.ON. It plans to make the final decision on the candidate by April 2006.

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