Nord Stream: Not Just a Pipeline

20 Bendik Solum Whist
this option would be considerably cheaper than the offshore pipeline in
the Baltic Sea (Umbach 2007: 11, Riley 2008: 8); not only because laying
an onshore pipeline is cheaper in itself, but also because the first Yamal
pipeline was constructed in such a way that it would be possible to add a
second pipeline at a later stage (Murd, interview). The counter-argument
from the Nord Stream consortium is that there is a need to become
independent of politically unstable transit states, and that a second Yamal
pipeline will not contribute to route diversification (Nord Stream 2006b:
28). In light of the Russo-Ukrainian and Russo-Belarusian energy disputes
of 2006 and 2007, it may appear logical to circumvent these transit
states to ensure stability of supplies to the EU. But, as the opponents
argue, this does not automatically imply a need for a sub-sea pipeline,
which may cost more and is politically controversial. Therefore, as early
as in 2004, Poland and the Baltic States proposed a third alternative,
Amber, which would bring Russian gas through Latvia and Lithuania to
Poland, where it would join the Yamal route to Germany (Götz 2006:
13). The Amber pipeline would thus contribute to route diversification
and bring Russian gas to Germany and the EU without passing through
non-EU transit states. Larsson (interview) believes that by choosing
Amber over Nord Stream, one would get all the benefits at a lower
overall cost; that is, if the main goal is energy security. According to the
First Secretary in the Energy Policy Division of the Lithuanian MFA,
Tomas Grabauskas (interview):
Amber, financially, would be three times less expensive than the
Nord Stream project. If you look from an economical point of
view, Germany and Russia are choosing a three times more
expensive project, so it looks like it is politically motivated …
When we have discussions with the Russian diplomats, they are
saying that they would like to avoid transit countries that are not
reliable … They are referring to Belarus and Ukraine, and we are
asking, have you ever had any problems with Latvia or Lithuania?
No, they have not.
It is, of course, important to consider Nord Stream AG’s response to the
scepticism outlined above. First, Chief Executive of Nord Stream,
Matthias Warnig, has stated that ‘the shareholders gave our company the
order to build an offshore pipeline through the Baltic Sea and in that they
are investing millions of Euros … The order is not – and it is not up for
debate – to have an overland route as an alternative solution for Nord
Stream’ (Reuters 2008a). Second, during a European Parliament petition
hearing on the pipeline project on 29 January 2008, the consortium
claimed that ‘an onshore pipeline, whilst cheaper to construct, would be
much more expensive to maintain over its lifespan due to the necessity of
compressor stations every 200 km along the route’ (Nord Stream 2008h).
It was also pointed out that these calculations did not even include transit
fees, which would push the cost even further. As argued by the editorial
of the Swedish newspaper Expressen (2006), ‘That the Baltic States and
Poland would rather see the pipeline laid within their territory has to do
with economic considerations. They are dreaming about shining millions
in transit fees, and that is not an argument that should be supported.’
Whilst this may serve as a powerful rhetorical point, the actual numbers
must be assessed. Although transit fees are commercially confidential,