Nord Stream pipeline opens, Russia-Europe interdependence grows

The Nord Stream natural gas pipeline will provide Western Europe with enough energy annually to supply 26 million homes with heat, and will tie Europe and Russia more closely together.

It is a grand project, even though most of it is hidden under water: Nord Stream, at 760 miles the world’s longest underwater pipeline, was officially opened today in the village of Lubmin on Germany’s Baltic coast. At full capacity, it will provide 27.5 billion cubic meters of Russian natural gas annually to Western Europe, enough to supply 26 million households with heat and hot water.

But the pipeline, built in a record time of only 16 months at a cost of 7.4 billion euros ($10 billion), also illustrates the growing interdependence between Russia and Europe in the energy sector, a relationship that some view with concern.

“The 21st century will be the century of fights over natural resources,“ says Alexander Rahr from the German Council on Foreign Relations in Berlin. “We will see new alliances struck all over the globe attempting to create energy security.“

For Chancellor Angela Merkel and Russian President Dmitry Medvedev, who turned the valve at Lubmin, it was a champagne occasion.

“Nord Stream is another step in solidifying the good Russian relationship with Germany and the EU,” said Mr. Medvedev. Chancellor Merkel was pleased about the successful demonstration of “how it is possible in the 21st century to implement complex projects responsibly.” Nord Stream’s ownership is shared by several energy giants: Gazprom of Russia, Eon and Wintershall of Germany, Dutch Nederlandse Gasunie, and French GDF Suez.

Nord Stream has been highly controversial since it was conceived in the late 1990s. Its main attraction for the shareholders is that by running along the seabed between Vyborg (near St. Petersburg) and the German coast they avoid paying transit fees to countries like Poland, Belarus, and Ukraine. Polish politicians were furious about being pushed out of the gas-transport business, likening the project to the Hitler-Stalin pact. Environmentalists in the Baltic countries, Finland, and Sweden were concerned for the already fragile ecological state of the Baltic sea.

But if there was any doubt – in Russia or Europe – about the need for Nord Stream, it was wiped out in 2008, when a dispute about gas prices led Ukraine to close the existing pipeline and use gas supplies for Europe as leverage in its negotiations with Russia – leaving Europe cut off.

“There was no bad guy and good guy in the gas conflict between Russia and Ukraine,” says Hubertus Bardt, energy expert at the Cologne Institute for Economic Research. “They both played a high-risk game. But it showed Europe how vulnerable it is.”

Europe has its own resource, though: Money. “Russia provides 25 percent of Europe’s gas,” says Mr. Bardt. “We wouldn’t make it without Russia. But they need European money. They have proven to be a very reliable supplier, even in Cold War times. Without selling gas Russia’s whole economy and its social security would collapse.”

Still, Europe is insisting on diversifying its energy sources. Another pipeline project, called Nabucco, aims to bring in gas from the Caspian Sea through Turkey to southern Europe. One of its supporters is former German Foreign Minister Joschka Fischer. “It is very unfortunate that we receive a large portion of our energy supply from countries with questionable human rights records,” Mr. Fischer told German broadcaster ARD. But energy experts have doubts about the capacities of the Caspian gas fields.

And if in doubt, Europe is likely to side with Mr. Fischer’s ex-boss, former Chancellor Gerhard Schröder, who together with then-President Vladimir Putin drove Nord Stream to implementation. “This pipeline is not directed against anything or anyone," said Mr. Schröder. "It will give energy security to Germany and Europe.”