Russ Oil-Gas

02-09-2007 - Upstream onLine - A Russian-German joint venture to build a controversial gas pipeline under the Baltic Sea is seeking financing from the European Investment Bank (EIB), Nord Stream managing director Matthias Warnig said today. He was speaking after former German chancellor Gerhard Schroeder, chairman of the company's shareholders' committee, met two European commissioners to seek support for the project, fiercely opposed by Poland and criticised by other Baltic Sea states. "Of course the EIB is a very important possible financing partner but we are still in initial discussions so I can't be concrete at the moment," Reuters quoted Warnig as saying at a joint news conference. The EIB is the soft-loan lending arm of the European Union, which finances projects in member states and partner countries. Warnig also said talks with Dutch national grid operator Gasunie to join the project, in which Russian gas monopoly Gazprom is a partner with German utilities E.ON and BASF unit Wintershall, were on schedule and there should be clarity in the second quarter of this year. Schroeder said EU member states, including Poland, had unanimously declared the project to be one of the Trans-European Networks backed by the 27-nation bloc to boost its economy. "This means that it is not just a project that only concerns Germany and Russia but it's a European project to do with European gas supplies," he said. Schroeder said the EU would need to import more than 70% of its gas needs in 2015 compared to 50% today and asked critics who feared excessive dependence on Russian gas to consider the alternatives, especially Iran. "The (United Nations) Security Council has just agreed sanctions against Iran and hardly any country in the world is prepared to make major investments in that country," he said. A European Commission spokesman said the commissioners for industry and energy, Guenter Verheugen and Andris Piebalgs, had confirmed in the meeting that the Baltic pipeline had been identified as a priority project of European interest. He was unable to comment on the financing. EIB vice-president Wolfgang Roth said last year EIB might cover 30% of the project's costs, estimated at about $6 billion, but the bank's Belgian president, Philippe Maystadt, later clarified that no decision on financing had been taken. Poland has led vociferous hostility to the pipeline, which would bypass the former Soviet Baltic states - Estonia, Latvia and Lithuania - as well as Poland and Belarus. Schroeder said Nord Stream was taking very seriously environmental and other concerns expressed by Baltic Sea countries beside the proposed route of the gas line and wanted to address all fears in order to overcome them. Environmental campaigners have voiced fears of damage to marine life as well as risks from unexploded mines and chemical weapons dumped on the seabed. Swedish politicians have also expressed concern about talk that the Russian navy could patrol the route of the pipeline, which passes close to the holiday island of Gotland. Asked about the possibility of building a spur from the pipeline to supply other Baltic countries, Nord Stream permitting director Dirk von Ameln said that was technically feasible but prospective customers would first have to conclude a sales and purchase agreement with Gazprom.