What difference would Nord Stream mean to European energy supply?

This is a guest post from Selene Rebane. She is from Estonia, has a degree in journalism and recently graduated from an MSc in International Relations from University of Bristol. She's particularly interested in energy issues in Eastern Europe and the Commonwealth of Independent States (CIS).

Nord Stream (also known as the Baltic Pipeline) stirs emotions in Europe.

Nord Stream route (EEZ = economic exclusivity zone).

The plans to build the politically and environmentally controversial Nord Stream pipeline have been in the air since 1997. With Finland and Sweden finally saying “yes” to the pipeline in their waters, the wheels of construction are now in full speed with the first line to be opened in the 2011. This will bring relief to Europe that is struggling with energy supply--yet not everyone is a winner.

The European Union accounts for 16% of the World's energy consumption but has only 6 % of the world's population. Natural gas comprises 24% of EU energy consumption. EU27 in 2007 consumed 505 bcm of natural gas per year according to Eurogas. This is expected to increase to 578 bcm by 2020 (estimations vary, some analysts claim that the gas consumption will decrease drastically). 40 % (128 bcm) of the natural gas is imported from Russia. The EU is also estimated to import 70% - 80 % of its energy supplies by 2030 as the North Sea gas supplies are diminishing; over 60 % of natural gas imports are expected to come from Russia. 10 % of the total EU gas demand would be covered by the Nord Stream. Natural gas will remain the fuel of preference for the EU because of its greener properties. In addition to that, phasing out nuclear power stations puts more strain on alternative energy sources. The pipelines that are running through Ukraine are aging and it is debatable at what capacity they would be running at by 2020: The EU offered Ukraine a loan of $2.5bn to revamp its pipeline infrastructure in March 2009, but it is debatable if this money went to pipeline upgrade projects as a proportion of that loan would have gone to repay existing gas debts to Russia; according to prime minister Tymoshenko, Ukraine would need an extra $3.5bn for the revamp of current pipelines.

The EU’s decision to lend $2.5bn was not welcomed by Russia, who said that it was “unprofessional” to make deals like this without consulting the main supplier (80 % of Russian gas exports currently go through Ukraine). It has been estimated that the existing pipelines are already well into two-thirds of their projected life span. The planned life span for Ukrainian pipelines, most of which were built between 1950 and 1970, is 33 years. (In 2004, 22% of the Ukrainian pipelines exceeded that and 66% were between 10 and 33 years old.) Logistically pipelines play a big role as not all countries in the EU have the capacity to use LNG facilities, and are still highly dependent on natural gas (see figure 1).

Country Dependence on Russian gas
France 21%
Italy 31%
Germany 43%
Slovenia 60%
Austria 73%
Slovak Republic 73%
Czech Republic 74%
Poland 79%
Hungary 81%
Greece 82%
Finland 100%
Estonia 100%
Latvia 100%
Lithuania 100%

Figure 1 (Source www.energy.eu)

There is no doubt that Nord Stream would provide great relief for European energy supplies, at least in the short term, because of the long term capacity of Algerian and Norwegian gas production: Algeria has the supplies, but the demand from Africa is increasing and pipeline construction is delayed, Norway seems to be going down the route of reducing its long term exports. Added to this is the problems with Ukraine as a transit country. Nord Stream would provide a steady and reliable gas flow to Western Europe, bypassing transit countries such as Ukraine and Poland. Russia and the Nord Stream will be playing an increasingly larger role in the EU’s energy supply. Recent cold weather in Europe and particularly in England has also brought that realisation home when, due to the disruptions to the North Sea gas supplies, Russia came to the rescue.

Nord Stream also has the blessing of the European Union, with the former EU Energy Commissioner Andris Piebalgs stating, “These (Nabucco and Nord Stream) projects have the full support of the European Commission”. In spite of the fact that there is a direct need for such a pipeline as Nord Stream, there have been a large number of obstacles on the way to building it, making it one of the most controversial pipelines in Europe. The project first started in 1997 when Gazprom and the Finnish company Neste (later known as Fortum) formed a joint company, North Transgas Oy, for construction and operation of a gas pipeline from Russia to Northern Germany across the Baltic Sea. This has now come to a joint ownership of Gazprom (51%), Wintershall Holding (20%), E.ON Ruhrgas (20%) and Gasunie (9%). Gazprom is currently also holding talks with GDZ Suez that would secure gas supplies to France in addition to Germany, Netherlands, Belgium and Denmark. Gas would come from the Yuzhno-Russkoye field that has estimated gas reserves of more than one trillion cubic metres, including 700 bcm of proven reserves. Additional gas supplies from fields in Yamal Peninsula, Ob-Taz bay and Shtokmanovskoye will also be available. It will be 1220 kilometres in length, making it one of the longest offshore pipelines in the world. It will run through Russian, Finnish, Swedish and Danish waters, but has encountered strong opposition from the Baltic States of Lithuania and Estonia. The decision from Swedish and Finnish governments to allow Nord Stream to be built in their waters came last autumn after more than three years of negotiations and Russian threats to abandon the pipeline construction and focus on LNG production instead.

One of the main arguments against Nord Stream has been its effect on the environment. The low salinity and shallow Baltic Sea has a fragile ecosystem and is more susceptible to environmental changes such as increased naval traffic involved with the building of the pipeline. Thus, the building of a new, natural oil pipeline has caused concern amongst environmentalists. The Nord Stream consortium claims to have spent more than €100m on different environmental assessments, one of the latest being the Espoo report that was published in 2009. "It is Nord Stream's aim to hold regular, genuine dialogue with interested parties. Having taken into account stated concerns and having thoroughly assessed the impact of the project, Nord Stream is confident that the Espoo Report provides a sound basis for evaluation of potential transboundary impacts associated with the pipeline," said Romans Baumanis, NS Regional Advisor for the Baltic States. Yet, the WWF calls the Espoo report “inadequate” pointing to issues such as a lack of data, underestimation of the environmental impact and improper risk assessment. Last week the Estonian Green Movement and the Estonian Fund for Nature sent an official complaint to the Commission arguing that the governments of Denmark, Finland, Germany and Sweden have violated EU directives on environmental impact assessment (EIA) and conservation of wild birds and habitats. The fact that Finnish ex-prime minister Paavo Lipponnen was appointed an advisor on Nord Stream has raised questions in the Finnish media that politicians have been paid off. It is also feared that the pipeline laying process itself will not be as environmentally friendly as claimed. Before the actual work on the pipe laying can start, the contractor would have to detonate abandoned mines from the First and Second World War lying in the Gulf of Finland, which can cause damage to the seabed, marine mammals and fish. First attempts at mine clearance in November 2009 failed, in spite of careful planning.

It is also believed that Russia’s eagerness, when it comes to building Nord Steam and South Stream, is largely motivated by the fact that it would help to bypass problematic transit countries such as Ukraine and Poland. Mikhail Korchemkin, analyst from East European Gas Analysis, believes that it is no coincidence that Nord Stream and South Stream combined would give the exact same capacity that is currently delivered by the Ukrainian pipelines (118 bcm/y). The EU’s decision to back Nord Stream has infuriated the Polish government. Polish foreign minister, Radoslaw Sikorski, has dubbed Nord Stream “the Molotov-Ribbentrop pipeline,” hinting that Russia is using natural gas as a foreign policy tool and a strategy to weaken the EU and NATO. Poland has a right to fear as it imports the majority of its natural gas from Russia (79%). The Russian decision to stop gas deliveries to Poland would have serious consequences on the country’s energy supply without affecting the main clients in Europe, such as Germany. The Nord Stream has issued a statement claiming that the security of supplies to Estonia and Poland would not be threatened. Another reason why the Baltic States do not support Nord Stream is that it would increase the traffic of Russian vessels on the Baltic Sea. This, considering the history of those countries, seems threatening to most of the former Soviet Union countries in the region. Incidents in Ukraine and Belarus would seem to indicate that Russia would not hesitate to use energy as a foreign policy tool.

At the same time, in a recessionary time, money is money. The Nord Stream has been of interest to Germany for years, with the former chancellor (and chairman of the Nord Stream shareholders committee) Gerhard Shröeder an avid supporter. The 2010 forecast on energy dependency in The Economist suggests that the new chancellor Angela Merkel privately dislikes the project, but will push for the project to go ahead because of Germany’s energy hungry industry. From an economic point of view Russia has every reason to want to keep Germany happy, as the latter is the biggest recipient of Russian gas (40 bcm/y in 2007).

Although Nord Stream would ease the need for energy supply, the European Union would become even more dependent on a single supplier than it already is. Yet, it seems as if the EU has to swallow this bitter pill inasmuch as Nord Stream coincides with its environmental objectives (an offshore pipeline would emit less CO2) and would help to make deliveries more reliable. The EU has no reason to believe otherwise, because before the Ukrainian and Belarusian incidents, Western Europe enjoyed a long and uninterrupted economic relationship with Russia reaching back to the 1970s, when it came to oil and natural gas. As in every deal, there are winners and losers, and when there is a buyer that is willing to pay good money for it, compromises have to be found. While it would seem that the environment and the security of supply to the Baltic States may be at risk, it is the rest of Europe that would be winning.

Facts & Figures

Route: Offshore pipeline from Portovaya Bay near Vyborg, Russia to the coast of Germany near Greifswald, Mecklenburg-Western Pomerania. Constructed by Nord Stream AG
Gas capacities: 55 bcm per annum (2 pipelines with 27.5 bcm capacity each)
Pipeline length: 1220 km - Nord Stream is one of the longest offshore pipelines in the world
Max. water depth: 210 m
Project start: 2005
Completion of the first line: According to plan – in 2011
Completion of the second line: According to plan – in 2012
Pipeline diameter: 1,153 mm
Design pressure: 220 bar/ 200 bar/ 170 bar
Pipe steel standard: DNV Offshore Standard OS-F101; Steel grade: X-70
Wall thickness: 26.8-41.0 mm
Coating: Interior antifriction coating of 0.06 mm epoxy layer; Exterior anticorrosion layer; Passive anticorrosive protection is ensured by aluminium sacrifice bracelet anodes
Gas supply resources: Yuzhno-Russkoye oil and gas reserve, Yamal Peninsula, Ob-Taz bay and Shtokmanovskoye fields
Estimated investment: € 7.4 billion
Shareholders: OAO Gazprom (51%), Wintershall Holding AG (20%), E.ON Ruhrgas AG (20%), N.V.Nederlandse Gasunie (9%)

Selene can be contacted at: selenerete AT hotmail DOT com

Geez!!! That's a seriously long pipeline to build underwater, and in a seriously cold region too. I didn't know they could even do such things before I read this.

Many thanks Selene for a fascinating report. I hope the Estonians get some useful jobs on the maintenance sector.

Shox thats exactly what I thought, and I'm not a mech eng.

Doesn't the Baltic freeze over for months every year??

You can just see the gravy train of the EEC in this one - 100M for 'environmental research' - thats a nice little earner. I thought the Baltic was full of shipping and fed freshwater by huge rivers? I suppose the impact is when it leaks...[edit: it's gas dozey, not oil - so where's the environmental damage??]

Fresh speculations :
Gazprom might abandon Shtokman

Shrinking exports to the EU and the strong growth in shale gas production in the U.S. might make Gazprom drop its ambitious plans for the development of the Shtokman field in the Barents Sea.

This was all over the Norwegian news yesterday, since Statoil (Norweian oil. Co) is a partner in the project.

The reason (!!??!!) :
US natural gas resources may question Shtokman

Unconventional resources of shale gas in US may close North-American market for Shtokman gas. Gazprom is contemplating over its marketing policy.

The Shtokman Saga

And also echoed in a report of the 'Oxford Institute of Energy', as the European pundits are beginning to realize the danger represented by putting too many of their energy eggs in the Russian basket.

Nevertheless, 'Shtokman' gas is not for tomorrow or even the day after. At best, it is still ten years away. In consequence, there is still plenty of time to 'wait and see' how things develop in the icy Barents Sea waters.
Today, looking at the players and the project's complexity, one cannot be optimistic about 'Shtokman'. Maybe a dramatic wake-up call could set in motion Russia's wheels to somehow tackle seriously this massive undertaking. Or some drastic change at the head of 'Gazprom', but given current conditions that would require little short of a political miracle…

Dr. Ali Morteza Samsam Bakhtiari

New technologies to extract gas from shale rock have altered the U.S. energy outlook for the next 100 years, Tony Hayward, chief executive of BP said on today. He also described it as "game changing".

North stream makes me uneasy since Russia and Germany has chosen a more expensive route.

A similar pipeline thru Estonia, Latvia, Lithuania and Poland would have been cheaper to build since it would have needed less steel by using compression stations and a more even preassure, no thick iron ore concrete layer as ballast and protection and mutiple low tech welding teams instead of a giant pipe laying ship. But there would have been a cost for buying a right of way.

A pipeline on land would have also have fulfilled the EU free market goals by providing an almost unlimited capacity for gas trade along the route thru the Baltic countries and norther Poland.

Yet Russia and Germany has choosen to spend billions of euros for a less usefull pipeline. The only compelling reason I can find for this is a strong wish to trade gas with western Europe withouth dependancy on eastern Europe. This opens up for ugly politics.

But I am even more worried that Russia might not invest enough in natural gas production to fill this pipeline and fullfill all contracts.

> The only compelling reason I can find for this is a strong wish to trade gas with western Europe withouth dependancy on eastern Europe.

You say it like you're surprised. Of course Russia wants to bypass Eastern Europe. And who wouldn't?

White Russia or Belarusia is a mess but it is to a fairly large degree Russias mess. Ukraine is hard to make business with and they are fairly independant. But the Baltic countries are from my p.o.w. stable, they work really well within EU and their northern neighbours are supportive.

Finland and Sweden are for instance making large investments in HVDC links to the Baltic countries. These links will help stabilize the Baltic grid if things turn bad but not shooting war bad and Russia and White Russia disconnects the Baltic countries from the former Sovjet grid. These links makes electricity trade possible during good times and we could even trade with Russia via these interconnects.

There are a centuries old distrust between Russia and the nordic countries, mostly Finland and then Sweden. Its only about a century since Finland got free from Russia. We can in real political terms never attack and hurt Russia but we do support continued freedom for the Baltic countries that were invaded during WW2 and we try to support free trade and democratic development. Democracy and rule by law can of course be a treath to certain power groups within Russia and White Russia but its not a treath to Russia as a nation. Our long term safety and prosperity would benefit by a prosperous Russia while a Russia fragmented into warlord fiefdoms or a poor Russia run by despots would give a larger risk for military aggression against us.

It would have sent another kind of signal if this gas pipeline had been built on land and preferably been part of a project refurbishing the old gas pipeline systems.

Right now Baltic countries are still mulling the idea of demanding multibillion reparations from Russia for occupation. And how wise it would be for Russia to give them bargaining power? And why should EU be a hostage of yet another centuries-old feud?

The Baltic countries are already a part of EU and would hurt themselves by initiating such a conflict.

The Baltic countries and Poland are the main source of conflicts between Russia and EU. It's just a sad reality. Russia do not want to get involved in any new projects with said countries.

If it's legitimate for Sweden and Finland to lay power cables under the Baltic to Estonia etc, then it's equally legitimate for Russia and Germany to run a gas pipeline under the Baltic.

It would not necessarily be cheaper to lay the new pipeline overland. Subsea pipelaying is a long-established well-developed technology, and we can do it pretty efficiently nowadays. Did the Norwegians find it cheaper to export their gas to Germany by overland pipeline through Sweden and Denmark? A look at http://www.gassco.no/wps/wcm/connect/gassco-en/gassco/home/norsk-gass/ga... will give you the answer.

If Estonia, Latvia, Lithuania and Poland had offered a commercially acceptable alternative land route, then it might be reasonable to question the need for Nord Stream. However, they haven't.

Nord Stream is similar in principle to the Blue Stream pipeline from Russia to Turkey via the Black Sea, i.e. it gives Russian gas direct access to a major consumer, avoiding transit dues and risk of political interruptions due to 3rd parties. It makes good commercial sense, and technically I think that Nord Stream will be easier than Blue Stream.

Disclosure: I work for a company that runs pipelay vessels!

If we extrapolate the reported Russian natural gas production number through December (based on a recent Bloomberg article), Russian 2009 production was about 19,600 BCF, versus 23,100 BCF in 2007 (EIA). In 2007, consumption was 16,700 BCF, resulting in net exports of 6,400 BCF. I assume domestic consumption has dropped, but for purposes of illustration, if consumption has not dropped, their net exports would have gone from 6,400 BCF to 2,900 BCF in two years, a drop of 55%.

So, how much of the production decline was related to depletion, and how much was related to pipeline and demand issues?

The conventional wisdom is that most of the decline is related pipeline/demand issues, but what is odd is that Norway--and probably every other European producer--seems to be producing at maximum capacity.

A pipeline on land would have also have fulfilled the EU free market goals by providing an almost unlimited capacity for gas trade along the route thru the Baltic countries and norther Poland.

The main purpose of Nord Stram is to avoid Poland which has been an even ore unreliable transit country than Ukraine. and it's not just the Russians who think this - the Germans do too.

Pondlife wrote:

Doesn't the Baltic freeze over for months every year??

You can just see the gravy train of the EEC in this one - 100M for 'environmental research' - thats a nice little earner. I thought the Baltic was full of shipping and fed freshwater by huge rivers? I suppose the impact is when it leaks...[edit: it's gas dozey, not oil - so where's the environmental damage??]

I do not see the problem in a portion of sea freezing superficially for periods, if the pipeline runs mostly under never freezing waters. Many pipelines go through freezing areas on surface, without big problems.

The problem of leaking in the already existing Russian long Siberian pipelines is right now. Mariano Marzo, a professor of Energy Resources in the University of Barcelona, estimates that probably up to 30 percent of the gas piped to Western countries may be lost by leaks, due to obsolete infrastructures and lack of proper maintenance in them.

And since natural gas is largely methane, which is 30 times more potent a greenhouse gas than carbon dioxide, losing 30% of the gas in a pipeline to leaks, increases the carbon footprint of that gas effectively tenfold.

And this loss of methane is often not considered when comparing natural gas emissions to those of petroleum or of coal. Natural gas's good reputation depends on it not losing a lot of gas along the route.

A somewhat dated study (2005) but very interesting. "Indirect emissions" are adressed in this German study, including Russia's.


If anything like 30% is lost, and not combusted, then gas has a significantly larger contribution to the greenhouse effect than coal or oil per unit energy. I never imagined that much was lost - a few percent maybe, but not 30%! If it is 'stolen' then combusted then no problem.

Does anyone have a reference to the 30% figure? Is it published anywhere?

In the USA, 20% of methane emissions measured in grams CO2 come from 'natural gas systems' which I would guess are mainly pipe leaks, behind cows and landfills. This amounts to 1.7% of all GHG emissions as measured in grams of CO2.


If Nordstream leaks at the normal pressure of 1500 psi I would guess the line would be shutdown for repairs.


The data of gas leaking up to 30% in Russian pipelines comes from

"CH4 leaks from transmission pipelines and compressors" 31%, referred to as "Structure of GHG Emissions", in page 17 of the IEA Report titled "Optimising Ruussian Natural Gas", dated in 2006.

South Stream was mentioned in passing in the article, but there was no info about it. I'd be interested to at least know where it is. Any maps available? What is the status of its construction? Is it controversial too?


Thanks Chris, I appreciate it.

your map shows the Nord Stream going south of the Danish island of Bornholm and through Polish waters, The map with the main article shows it going north of Bornholm thus requiring Danish cooperation but not Polish and from the text this appears to be the case.

Good spot. I think the map I posted is a lower resolution and not accurate to this level of detail.

well, actually Estonia would be excluded from this deal altogether. One of the reasons Nord Stream is so controversial is the fact that it's so political. Estonia and Russia had a huge rift in 2007 and consequently is excluded from the deal as the pipeline doesn't run through Estonian waters. Estonia would have the right to block it, but it would then be seen as a trouble maker in the EU and no country wants such a reputation.

Regarding the concern for leaks - yes, it's a serious environmental issue, but hopefully the project will remain closely monitored by non-Russian partners as well as by the countries that are located by the Baltic Sea

"The Baltic countries and Poland"

This "problem" for Russia and Germany is worth paying the extra money and go through the Baltic. Fewer people to deal with, a no brainer in my opinion.

Do not forget the famous "Shield" that was to be installed in Poland/Czech Republic. After this I am sure that the Russian's just crossed out making any kind of deals with Poland. This one may come and bite Poland/Czech's in the future as the big boys do not forget things like that as history shows.

The pipeline is being built by west European companies.

Isn't one of the attractions to Russia of an underwater route the fact that it would avoid having the pipeline go through Ukraine or some other country that Russia might have to pay transit fees to?

I think on a previous thread regarding oil pipelines, there was some discussion of Russia perhaps trying to cut back "export land" (the area that gets a disproportionate share of the resource) to just Russia, instead of including Ukraine or Belarus as well. It seems like there may be some of the same issue here as well--but the alternate route here is just Ukraine, and probably needs replacement/upgrading anyhow.

The main goal here is to avoid Poland, the only country to have actually used the "energy weapon" in Europe in the past 15 years, by exorting a couple billion dollars from Russia in the late 90s (I'll have to write a story on this one day). Neiher Russia nor Germany have forgotten, even if they can't talk about it.

Great posting. A remark about your source www.energy.eu :
This looks af it it was an official website from the EU commission, but it is not. According to the site
"Europe's Energy Portal is a commercial organization, strongly rooted within the EU, but run independently from the European Union.
The portal is ran by the undersigned, together with a small team of professionals from the energy and environmental sector."

So one might be somewhat wary about the content.
For example the site contains a section called "Depletion", which sounds like a good intention. But stupidly, it calculates the "Estimated date of exhaustion" on a base of linear extraction.
For example this is for oil : 20:58 Oct 22, 2047
and for coal: 20:05 May 19, 2140

I think a EU commission site (at least under the PO aware former Commissioner Andris Piebalgs) wouldn't publish such a nonsense.

Thanks Selene (via Chris). Another excellent factual article with pertinent analysis. I can't help but wonder how the nations most affected will work to break the addiction to non-EU oil (if they do at all).

A good article.

My thoughts.

A Russia-Germany (EU) alliance is the nightmare of every statesman in the UK and in the US. The US needs Europe (Germany) to preserve their current role of being number one superpower.

The goal of Russia is thus to win over Germany to their side.

This pipeline is definitely political. Poland is one of the main allies of Washington in the region. Ukraine is flirting with NATO membership. Russia's goal is to neutralize these countries on the political scene. The South and North Stream pipelines are the tools of this policy.

In the meantime the USA (and UK) is doing everything it can to antagonize Russia and the EU. (Missile shield is a prime example)

This is a very dirty game. The other side of the game is played of course in Central Asia and the Middle East. As long as the US can keep their military presence in that region, they control the only alternative where Europe can buy energy from. If you ever wondered what is the reason behind the US military budget, look no further. It is the control over the Heartland, which is not Eastern Europe as stated in the original Mackinder theory, but it is Central Asia and the Middle East. Without the support of Europe, it is impossible to maintain a military presence in the Middle East. Without a Middle East US presence, the EU can freely chose its alignment - which would naturally lie with Russia.

In my view, despite all its shortcomings, Russia is winning. And it is foolish for Eastern European countries to fully support either of the great powers. Poland has already entered a world war in alliance with the UK and US, but what it did it gain them? Countries in Eastern Europe have a nice bargaining chip on the table - their geographical location. Poland and the Ukraine are about to lose out on it. Antagonizing Russia was a foolish policy by these countries.

When you look at these numbers you really have to wonder who has been paid off by whom......

Czech Republic 74%
Poland 79%

although it might seem as if trading with Eastern European countries would be a lucrative deal for Russia, it's worth baring in mind that a lot of these countries still receive energy subsidies from Russia, such as Poland for example, see http://www.neurope.eu/articles/Poland-Russia-have--yet-to-sign-gas-agree...

It's mainly the transit issues that force Russia into such agreements, hence also having a direct pipeline would be much better.

Hi Selene,

as far as I know Poland, Czech Rep., Hungary never received any energy subsidies from Russia, at least not after USSR breakup. You link talks rather about Gazprom not paying transit fees to Poland in time.

Belarus, and until recently also Ukraine, could buy Russian gas at a much lower price than the other customers - much nearer to Russian internal market price than to the "real" international market price. This is why some said that Russia was effectively giving energy subsidies to these two countries. However, gas prices for Poland, Czech Rep., Slovakia, Hungary etc. are mostly the same as for Germany. Also the prices for Ukraine were raised after the Orange Revolution, although they are not as high as these for Poland or Germany yet. At the moment only Belarus gets gas prices low enough to talk about subsidies.

I suspect that Russia builds the pipeline to gain more flexibility in case of political conflict with one of the "uncooperative" countries such as Poland and Ukraine. And the said countries complain because they loose some bargaining power. However, after the pipeline is built East Europe will still buy Russian gas, so this is a win-win for Russia anyway.

I was actually implying that it is insane policy for these countries to antagonize Russia.

Their leaders do not follow common sense. They are either stupid or they are paid from Washington.

I would agree that these countries overestimate the power (and the will to help in case of trouble) of Washington and underestimate the power of Russia. However, Russia is not as undefeatable as it might seem from far away, just check this out: Wikipedia - Polish-Soviet War, 1919-1921. Secondly, these coutries are already antagonistic against Russia, and being even more antagonistic does not change the situation that much anyway.

You could say that Cuban or Venesuelan leaders must be stupid to antagonize USA. Or, that they must be paid by Moscow/the Chinese. Although both views could be true to some degree, as independent countries they have the right to value independence higher than money, and they make use of it.

(edited typos)

Well that all sure points up how much easier negotiations are in the bulk of North America with only two national governments involved. 'Local' has its pitfalls.

Thank you Selene

Interesting Days for energy supplies in western Europe. I bet they love depending for their energy from their former and recent adversary – the Great Eastern Bear.

Your table did not include The United Kingdom which has a very interesting history in energy and economy. Do you know the figure for the UK? I would think it is quite high. Will the Nord Stream gas reach the UK?

The UK was once a major player in energy and manufacturing. Not anymore. The reasons are interesting wrt Peak Oil and dependency on Russian gas pipelines.

Thomas Newcomen developed the Steam Engine in 1712 to pump water out of English coal mines. Coal in those days was used for domestic heating and cooking. Still is in parts of Europe and the UK today. With Watts refinements in the 1770’s, the Steam Engine and British coal, powered the Industrial Revolution. The UK developed massive industry including; textiles, steel, ship building, car, truck and aeroplane manufacture and household and electrical goods. In 1908 Winston Churchill as First Lord of the Admiralty mandated that the British Navy (then the most powerful navy in the world) would switch from coal power to oil. This started Britain’s dependence on oil from the Middle East and the decline in its coal industry.

British industry was still in working order at the end of the second world war only 65 years ago – but now all gone. What happened? Well the UK discovered the North Sea Oil field. Wow! We’re Rich. We don’t need those dirty little industries. We don’t even need coal. And the coal miners keep asking for a more equitable share of the nation’s mineral wealth that they were digging out in dark, dirty and dangerous conditions. So manufacturing was sent overseas and the Thatcher government closed down the pesky coal mines. At the same time the oil spigots were opened both in the UK and in Reagan’s US government. This dropped the price of oil and starved Russia of foreign capital from the sale of its oil, which was about its only source of foreign exchange. England expanded its Financial Service industry to compensate for the loss of its manufacturing industry. London became a world financial centre second only to New York. The UK went into hyperdrive on the growth economy program (you know, new houses, new shopping centres, new business parks) and increased its immigration significantly to build and fill all these goodies.

Russia ran out of cash and we won the cold war. Probably a good thing I guess. But then two things happened that were really really bad for the UK. First the North Sea Field peaked and went into decline which continues to this day. Wow, Isn’t that exactly what this TOD site is all about? Now the UK has a serious energy crisis on its hands. Just last year (2009) the government announced a crash building program for nuclear power (the wrong solution IMO). I believe the UK is almost totally dependent on Russian gas for all its domestic use, mostly heating. (Selene help me out here) So who won the war you might ask and who has whom by the throat?

The second thing that happened to poor old England was the Global Financial Crisis. All those lovely financial service jobs went crashing down or onto government bail out plans. Man you could sure confuse the UK and USA in this story, they have almost identical scripts.

So where is the UK today? No manufacturing industries, no coal mines (there is still coal left in England and Wales but I don’t know how much or what quality), a large new population many from religious and ethnic backgrounds that do not want to integrate into British society, a rapidly declining energy base from the once mighty North Sea Oilfield, a GFC induced decline in financial service industry and dependency on Russia for its domestic gas. Add to this a high unemployment rate, decreasing government services and overcrowding in cities, the UK to me seems to be slowly sliding into third world status. (I don't live there but I go there every few years).

Perhaps this is the model for the deindustrial future we might all be facing if government and business continue their dream of BAU and growing economies in the face of energy decline.

Sorry for the long “comment” but I thought the UK is a very interesting case: from industrial superpower to an energy deficient deindustrial country with declining living standards all due to a regional Peak Oil scenario. The final irony is depending on your enemy for a major source of your energy.

The UK is still 50% self-sufficient in gas (and 25% self-sufficient in coal). Norway supplies most of our gas imports, not Russia. And domestic heating only accounts for 1/3 of our gas useage.

Refer to the DECC website www.decc.gov.uk/en/content/cms/statistics/publications/dukes/dukes.aspx for the latest statistics.

Hello Scottish. Thanks for those details.
Cancel my last line on depending on your enemy for energy. I will make the edit.

aaah, Scottish, you got there before me :) Yes, most of UK gas comes from Norway and the North Sea. It has been estimated though that the North Sea gas supplies are running out and that would indeed make UK more dependent on Russian gas. There is a planned extension to the pipeline, that would run from Germany. Have a look at a map:


UK gas supplies are indeed running out, leading to my estimate that UK self-sufficiency will only be about 50% this year.

I doubt whether the Nord Stream consortium will build major new overland pipelines through Germany. The pipelines which currently take gas from the Netherlands into Germany will soon become available for flow reversal, as Dutch gas production moves into the terminal decline phase. That's got to be a cheaper option.

In any event, the UK will never be dependent on Russian gas, for the simple reason that Norway is a lot closer so transport costs are less. Whether the UK can afford a gas import bill of £14 billion/year is another matter - but not relevant to Nord Stream.

As a general point, I'm disappointed by the lack of "insider comments" so far. For example, professionally I would be very interested to see a contribution from someone in Saipem.

DUKES 4.1 says in 2008 the UK was still 74% self sufficient in natural gas.

It might also be worth mentioning that the UK still (as of 2007 at least) ranks as the seventh largest manufacturing nation. Data's from here: http://unstats.un.org/unsd/snaama/dnllist.asp

2007 Manufacturing output ($bn, 1990)
$1,724 United States
$1,084 China, People's Republic of
$978 Japan
$525 Germany
$318 France
$260 Italy
$232 United Kingdom of Great Britain and Northern Ireland
$214 Republic of Korea
$189 Russian Federation
$177 Brazil
$152 Spain
$148 India
$142 Canada
$106 Poland
$99 Sweden
$83 Mexico
$80 Indonesia
$72 Turkey
$72 Argentina
$71 Netherlands
$63 Switzerland
$63 Finland
$57 Australia

Looks like 2008 data is available now but I haven't had a chance to filter out the manufacturing data.

I'm from Czech Republic. You have a mistake Slovak Republic has 100% dependency on Russian gas, Bulgaria too. Czech Republic have 100% gas from Russia, but it's a SWAP deal (Norway gas is burning in Germany and Russian gas is burning in Czech Republic).
I think Nord Stream will be positiv for Europa and for Czech Republic, but not good for Poland, Belarus and Ukraine. Today to Europe and Turkey (NATO member) leads this pipelines:
Jamal to Germany (max capacity 34bcm) throught Belarus and Poland
Blue Stream to Turkey (max capacity 16bcm)
The rest (normal use cca 110 bcm) throught Ukraine.
Germany is angry, because Ukraine and Belarus are't reliably and it's threat for Germany. Ukraine and Belarus rack Russian and Russian have to make big sales for this countries.
After build Nord Stream will no longer Poland transit country, so Poland lose fees - there is a biggest problem for Poland.
I think it's nearly 100%, that this pipeline will be build. The pipes are made, loans confirmed, all needed countries permited. Russian already builds compressor station and German builds OPAL pipeline - it connects to Nord Stream and it would be without Nord Stream uselessly pipeline.

I live in Poland and what petr007 say regarding Poland is true. As I understand it from here. The transit fees will hit the Polish economy. They need all the money they can get here as the social infrastructure (schools, hospitals, other services) is starting to feel budgetary problems.

The overly aggressive policy toward Russia is not helpful in doing business. Nordstream is the end result with the result that the transit countries will be the losers.

Just like US has not problem doing business with Communist China, Ohh sorry I meant Democratic China, the former Soviet States should have learned this lesson also and gained by it. Heck, Germany which did so much damage to Russia has some of the best relations than most of the former Soviet States. In a diminishing HC energy World you better make friends everywhere or suffer in cold.

Ahoj Petře,

I think that transit fees are a valid point in case of Poland, but not the central one. From my understanding, and from Polish media coverage in the last 15 years, I reckon that the most important aspect is the loss of energy security. Let me explain.

1. Cutting off gas supplies happens somewhat longer than it is present in the westerners memory, and happened already in the 90's. Russia might cut off gas to exert political pressure on a given country, and also a transit country could exert such pressure by stopping transit to big customers in the west.

2. The current configuration of pipelines means that the gas needs to pass either (1) Ukraine or (2) Belarus and Poland on the way to main customers. The main transit route is Ukraine. This configuration gives Ukraine a "blocking power" over Russian gas transit. Russia is unable to "cut off" Ukraine without cutting off the other customers. However, cutting off Belarus is somewhat possible since only Poland and partially Germany are affected in such a case.

3. To have a possibility to bypass Ukraine (ad have the possibility to press on it harder, by e.g. cutting gas for a much longer time than now), Russia proposed Poland to build a pipeline going from Belarus through south-eastern Poland to Slovakia (this was in the end of the 90's, I think). Poland could get one billion dollar (10^9) transit fees a year. However, this would mean Russia could "cut off" Ukraine at will. Poland declined as a sign of solidarity with Ukraine. As you see, transit fees were not the main point.

4. The only way for Russia that does not go through PL and Ukr needs to go through a sea - either the Baltic or the Black one. So, the two streams are being built now.

5. After completing the streams, not only Ukraine but also Poland can be freely cut off by Russians without affecting the western customers. Poland looses the advantage of having as safe gas supply as Germany had. Now Ukraine or Poland can freeze for months and nobody in the West would care. Also, with the pipeline built, the political power of Russia grows, while the political power of Ukraine and Poland shrinks.

You can also view it in a broader context of a geopolitical play concerning the western or eastern alignment of the Ukraine. Polish moves in supporting the Ukraine against Russia were directed towards pulling it towards west. With the new pipeline, Russia has now a tool to make Ukraine stay in its sphere of influence.

The problem is, that Ukraine and Belarus aren't fair partners. They want to pay lower gas prices, than other EU countries. I think Russia doesn't want cut off some countries. Russia will get only normal price for gas and with Nord and South Stream will punish these countries. I think in the case "normal behaviour" of these countries new pipelines wouldn't be build. So the possibility to bypass Ukraine from Belarus through south-eastern Poland to Slovakia doesn't solve the problem.
Nord Stream will be build in a short time, but South Stream is costlier and have only one important customer - Italy. In Ukraine will be new president, Tymoschenko and Janukovic want to have good relationship with Russia, so the South Stream will not build immadiately. It is also possible to build South Stream to Turkey and then to EU. (It will be cheaper.)

I write from Poland and at first I must clear you all on some basics.

1. Poland does not get any money from Russia since 1989 when we won our independence from Soviet Union.
2. Poland natural gas import is 67% not 79%. Local production is at 33% and constantly rising.
3. Poland has enough of its own gas to be self-dependent in this area and even export. Russia realizes that, thats why they need a route around Poland for they know it best, that within 5-10 years Poland might reach extraction level which will allow to stop buying from Russia. The only reason this hasn't been done yet is that people in mining industry in Poland were Russia's loyal servants, but every day they are replaced by young wester-oriented specialists, who are loyal to POLAND, not to Russia.
A handfull of western companies have acquired concessions for gas exploration and they are prepared to drill any moment. Poland has gas fields estimated for 200 years of our needs.
4. Poland doesn't need much of natural gas and our demand diminishes every year. New apartments being built have no gas installations at all. Electricity, wood or coal heating is cheaper and more effective.

To sum up:

Nord stream is not a great vicory of Russia over Poland or any other countries. UE will help Poland if we need it. UE sends financial help for Russia every year in millions of Euros and Russians will need European money for food sooner than Europe will need their gas.

So please, don't worry. I'm not worried at all so neither should any of you be.

After all Russia is a poor country with 80-90% of its budget incomes coming from oil and gas. So it is enough if the average price of oil drops below 60$/barrel and they go bancrupt in 2 years.

According to latest available yearly figures (up to 2008) from the BP statistical review it appears that domestic production is well below its peak in the late 70s, domestic usage is increasing and so are imports.


It's barely visible. And as I wrote earlier as well as what you can see from this graph - 1/3 is domestic production. There is just no need for incentive at the moment, because it's so cheap. But potential of the unconventional gas shale in Poland is extraordinary.

My monthly gas bill is about 5$ and for me (I earn about 200% of average salary)it would become an issue if I had to pay 50$ per month. But the Nord Stream is not going to cause the price to rise 10 times I guess.

"Poland has gas fields estimated for 200 years of our needs."

Few countries are that lucky :-) Can you provide the source of this information?

If you look here you will see proved reserves as 5,820 bcf. Consumption being 574 bcf, which does not result in Natural Gas security for 200 years !!!



Poland is not the only country with this problem !!!!!

No, because it's strictly confidential. Big natural resources is not something a wise country brags about.

If you discovered 100 tons of gold in your own garden, would you publish it in all newspapers in the country?

Cześć Raven,

please note that on this site we follow the standards of scientific discussion. That is, we provide data to verify our claims, or at least try do to do. Also, it is hard to disprove data of the others by anegdotical evidence such as saying "I dont think so" or "it is not visible" or "it is secret so you dont know it, but I do". As long as you do not provide the data, few will believe such exagerated claims.

Added - edited: I think that sources such as the daily Gazeta Wyborcza - gas shales in Poland with potential of 200 years supply do not really count much, since the amount of media spin and anti-Russian sentiment there is rather high (just look at the articles by W. Radziwinowicz). The claims in the linked article are not verified yet. Let's rather talk about hard data, such as from the geological institutions, and not about media hysteria.

When I was speaking of Russian subsidies, I should have phrased myself better. What I meant was that some of the Eastern European countries pay less for gas than the rest of the Europe, in return for lower transit fees for Russia (Poland, Ukraine).

I have found that when doing research for articles such as this, it is quite hard to find unbiased sources as it would seem that everyone has a vested interest and when it comes to statistics, then various sources quote different statistics. Also because things in energy markets move very quickly it's hard to find academical sources on the topic because academia tends to be two-three years behind on the research.

Putting Ukraine and Poland to one basket is a mistake. Poland is an independent country whereas Ukraine is still under very strong influence of Russia. Poland pays the market price for gas and oil to Russia and to any other country. Ukraine pays significantly less, as they cannot afford to pay what everybody else pays.

Poland has chosen long time ago that we want a freemarket economy. Ukraine is on the verge of coming completly under Russia again. The presidential elections in Ukraine will soon give the answer. If they choose Janukovycz the hope will be gone for very long time for them.

Nice :)

So you decide which source is allowed and which isn't. Show me where this scientific approach is sanctioned, because I'm not inclined to be intimidated by such poor technique. I can't see any science in that, sorry.

Oil, gas and other strategic resources have long time ago become political issues, they are no longer only scientific. So as well as some experts are confident that "HARD DATA" presented for example by Saudi Officials on oil reserves isn't serious or true - I can easily find it possible that a country which has knowledge about its big resources choses not to speak of it.


I wrote it above and I'll do it again. If I found tons of gold in my garden I wouldn't say a word - not to you or anyone. That's the difference between wise and dumb. To not understand this is below dumb, sorry.

My source is not Gazeta Wyborcza. But even if it was, you don't get to decide which article they publish is reliable and which isn't. I prefer to believe independent scientists such as university professors, who have knowledge noone else has.

And finally - you must check the difference between "official" and "unofficial". You'll start understanding a lot more - I guarantee.

I assume you are talking about proven and probable reserves, which just weren't reported in the official numbers. I also understand you are talking about shale gas. How would you guarantee that the companies that invested millions in exploration didn't report their huge finds? PGNiG doesn't have the technology for gas shale exploration, so these companies must then have been foreign, probably American. Do you believe the Americans would miss such an opportunity for increasing their share value?

There is a difference between "we checked and there is x amount of gas" and "we do not know yet, but with all things turning out positive there would be x amount of gas". I think the 200 years claim is rather in the second category. And the third option, "we know there is x amount of gas and we do not tell anybody" just doesn't hold water.

I am still not convinced with regard to your claim, and I do not even see how "to not understand this is below dumb". Let then each of us stay with his opinion, and the time will tell who was right. The secret gas reserves will not stay secret forever :) - unless they are non-existing.

PS. Regarding the scientific approach - just check out how some people on this site disprove the official Saudi numbers (reservoir geology analysis, satellite data analysis, etc.). This is more scientific than just saying "believe me" with no backup in data. Mind how much data Matt Simmons collected before challenging Saudi claims. This is what I would call convincing, and this is what can make me believe the unofficial more than the official.

Klackon, Hi. "we follow the standards of scientific discussion" - fair comment - agree, BUT not everyone has the same expertise and easy access to hard irrefutable data.

R4VeN's original and patriotic statement is still valid even if the 200 years of remaining polish gas supplies are not scientifically validated and perhaps just wishful thinking.

One of the great advantages of "open" scientific blog sites like TOD is that everyione contributes to the flow of information on the whole theme of oil depletion scenarios; energy specialists, highly educated people from other fields, people concerned with deteriorating global environment/civilisation issues and Joe Sixpack. Let'Em roll I think!

If statements by non-specialists are not accurate there are enough specialists on this site to correct the information. We all benefit.