Trans-Baltic North European Pipeline

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The agreement on constuction the trans-Baltic North European Pipeline (NGP) was signed September 8, 2005, in Berlin by Russian President Vladimir Putin and then German Chancellor Gerhard Schroeder. [1]

The significance of the NGP project is "because it creates a completely new export route for transporting Russian gas to Europe," Nina Kulikova reported November 28, 2006, for The "Russian gas monopoly Gazprom and the German companies BASF and E.ON agreed on the construction of a pipeline that will cross the Baltic Sea, bypassing the Baltic countries and Poland. According to the documents, the pipeline will link the Russian coast in the area around Vyborg to the German town of Greifswald, running 1,200 kilometers (750 miles) along the Baltic seabed. From Greifswald it will continue across Germany and into the Netherlands, before crossing the North Sea to Britain. The project also provides for a possible branch pipeline running up to Scandinavia. Total investment in the project amounts to more than 4 billion euros ($4.7 billion).

"Germany is currently the biggest export market for Russian gas, receiving 37 percent of its total gas supply from Russia. Under the terms of the agreement signed in Berlin, the partners have agreed to create a joint German-Russian company, the North European Gas Pipeline Company (NEGPC), with Gazprom holding a 51 percent stake as well as the exclusive right to export gas through the pipeline. The German partners will each receive a 24.5 percent stake in the joint company, but the agreement provides for reducing this stake if new, non-German partners, join the project. One of the German partners in the project, E.ON, is a major foreign shareholder in Gazprom with a 6.5 percent stake in the Russian gas monopoly. As part of the agreement, the parties involved must contribute charter capital to NEGPC in proportion to their stakes in the company. Furthermore, E.ON and BASF must take responsibility for financing the project by making loans available to NEGPC in proportion to their stakes," Kulikova wrote.

"The main source of supplies for the pipeline will be the Yuzhnorusskoye gas field in the Yamal-Nenets Autonomous District. While this field cannot supply the entire pipeline, Gazprom representatives say that by the time the second stretch of the pipeline has been completed, it will be possible to start bringing in gas supplies from the Yamal, Obsko-Tazovskaya Bay and Shtokman gas fields," Kulikova wrote.

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