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Thursday, January 22, 2009

'Gas row boosts Nord Stream plans'

01-22-2009 - Upstream OnLine - Germany's Wintershall will press on with plans for the Nord Stream gas pipeline, with board member Rainer Seele adding that the gas group will "apply lessons learnt from the Russia-Ukraine gas transit crisis". "We have to do our utmost to get clearance for the project. For our part I can say we will make our billions (of euros) contribution to it despite the finance crisis," Reuters quoted Seele as telling reporters at an energy conference. "The safest transit country is the Baltic Sea." The €7.4 billion ($9.55 billion) project - a joint venture between Wintershall's parent BASF, fellow German outfit E.ON Ruhrgas, Russian gas giant Gazprom and Dutch player Gasunie - will bypass Ukraine, bringing Siberian gas to Europe via a subsea link running under the Baltic Sea from Russia to Germany. It has been delayed after Finland, Sweden and the Baltic states have demanded environmental impact reports into the link, but pressure to complete it is mounting after this month's disruptions in supply via Ukraine. Wintershall, which relies mostly on pipeline gas brought in from Russia, the North Sea, and other locations to supply its customers, would also take a fresh look at possibilities for liquefied natural gas which is transported on special ships, Seele said. LNG makes consumers independent of transport via pipelines. Seele said he was still sceptical about LNG as an option for Europe, as there is not yet an infrastructure for it, but it was becoming increasingly important in the pricing of spot gas. "We will reassess LNG," he said. Seele - who doubles as chairman of the Wingas trade unit, a 50/50 joint venture between Wintershall and Gazprom - said the unit was on track to report a 2008 sales increase of 18.1% to 30 billion cubic metres, an all-time record and originally a sales target for 2010. He cited pricing strategies and success in wooing customers. Commenting on pending approval for a UK gas storage site at Saltfleetby, he said he was disppointed with the delays which already put back the start of construction by two years. A decision is due within a few days whether a new public hearing round is also needed, he said. "It might take another year before we can start," he said. Unlike continental Europe, the UK does not yet have sizeable storage capacity to bolster supplies to the market in harsh winters or during transport crises. But a law stemming from the 1960s is holding up approval of the Wingas plan for the 400 million cubic metre storage site in Lincolnshire.

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