North Stream Gas Pipeline, a Strategic Route both for Russia and Europe

A remarkable gas market development very recently was testing and putting into operation of the North Stream gas pipeline. The North stream route includes two parallel pipelines the first one of which has now gone into operation and the second one is scheduled to become operational in 2012. The first pipeline is 48 inches in diameter; the world’s longest seabed pipeline. In terms of size and length, this pipeline exceeds Norway’s North Sea underwater gas pipeline that stretches to Britain. The North Sea pipeline is 1166 kilometers long, however, the North Stream pipeline is 1222 kilometers in length and can transfer 55 billion cubic meters of natural gas per year.

The North Stream pipeline is the symbol of Russia’s strategic will to keep West Europe dependent on its rich natural gas resources.

The idea for the construction of the North Stream pipeline project emerged back in 1997, however, it was only until 2006 when the Russians and Gasprom Company of Russia practically initiated to go ahead and commence construction of this pipeline. The project became operational in 2010 and 2011 within a very short period of time. Independent from any other country’s territory, this Baltic Sea underwater pipeline stretches to the German soil where it merges with Europe’s pipeline network.

Older pipelines for the transfer of Russian natural gas to Europe crossed Ukraine and Belarus. Ever since collapse of the former Soviet Union and independence of the latter two nations, there have always resided differences and disputes over gas deals. This has been more serious in the case of Ukraine. Russia accuses Ukraine of over-extracting, preventing precise measurement and finally purchasing natural gas at low prices which are not even paid for. So far, Russia has not been in a position to stop flow of gas in a bid to press Ukraine, for in that case transfer of Gas to Europe would be jeopardized. In an attempt to punish Ukraine, in winter of 2006, Russia finally discontinued transfer of gas for the first time. Some viewed this measure as a move intended to ask for more political concessions from Europe. In 2008 too, flow of natural gas to Europe was halted. Discontinued supply of gas to Europe in 2006 put people in that continent into deep trouble and for that matter European governments opted for diversifying their natural gas suppliers and transfer routes as a strategic principle, thus, Naboco pipeline and African suppliers were placed on the agenda more seriously as alternatives to the Russian gas supplies. This attempt by Europe served as an incentive for the Russians to initiate to construct the North Stream pipeline more decisively this time.

The North Stream gas pipeline will make things more complicated for Ukraine and Belarus as a serious menace. In the event these states fail to come to some kind of agreement with Russia, they will have to prepare for likely discontinuation of gas supplies by Russians. Additionally, the Russians are expected to prefer West European market to the Eastern one any time they are short of supplies.

The North Stream pipeline enjoys high environmental standards, for it crosses free waters and part of the water seabed is located in Finland, Sweden and Denmark and for that matter, Russians had to secure consent of these states which adhere very much to environmental principles.

The North Stream pipeline is an illustration of close interaction of energy and politics revealing the fact as to how gas rich states have to perform when targeting gas markets should they wish to use gas as a political tool and lever of pressure, similar to what the Russians did. There is no doubt that Russians have faced impediments and obstacles when executing this project. Americans, by tradition have been and still are opposed to Europe’s deep dependence on the Russian natural gas. When a country becomes dependent on another nation’s gas, the supplier state will have the opportunity to impose its desired price. Performance of Russia in this very special case can be a teaching lesson for the natural gas rich states such as Iran. The target markets should be selected quite carefully while rivals and aliens should not be allowed to impede execution and construction work.