August 22, 2012
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№ 10 (October 2009)

Piped Gas from Russia to Boost Britain’s Supplies from 2012

Britain is to start piping gas directly from Russia for the first time in 2012, according to the chief executive of Nord Stream, the Kremlin-backed gas pipeline venture.

By Robin Pagnamenta, Energy Editor

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In an interview with The Times in Switzerland, Matthias Warnig said that more than 4 billion cubic metres of gas a year had already been booked for the UK market through the pipeline, which is due to enter service by the end of 2012.

That is equivalent to more than 4 per cent of total UK gas demand of about 94 billion cubic metres per year.

Mr Warnig said the additional gas imports would help to offset a steep decline in production from the North Sea, which is due to fall by 6 per cent this year.

“The UK is switching from a gas exporter to an importer,” he said. “By 2025 there will be a substantial import need … Several billion cubic metres per year are already contracted for the UK through Nord Stream.”

At present, Britain imports negligible quantities of gas from Russia but that is about to change. Construction of the €7.4 billion pipeline, 51 per cent-owned by Gazprom, the Russian gas giant, is due to start in April. It will be laid at a rate of three kilometres a day by special vessels starting from the German and Russian ends of the route.

Russian gas destined for the British market would be piped through the Netherlands and Belgium, across the North Sea via pipelines that run to Bacton in Norfolk.

Mr Warnig said that 22 billion cubic metres of the pipeline’s 55 billion cubic metre capacity had already been contracted out by its partners, which include E.ON and BASF of Germany and Gasunie of the Netherlands.

Of that, he said, Gazprom UK had booked 4 billion cubic metres a year while another company, Wingas, had contracted a further unspecified amount for the UK.

Britain will need to import 50 per cent of its gas supplies this winter from countries such as Norway, Qatar and Algeria, a sharp rise from 27 per cent in 2007.

Britain was a net exporter as recently as 2004 but by 2015 will need to import three quarters of its supplies of the fuel.

The growing dependency on imports is a result of Britain’s increasing reliance on gas for electricity generation.

Almost 35 per cent of UK electricity comes from gas-fired power stations, up from less than 5 per cent in 1990.

Nord Stream is based in Switzerland for tax purposes and because its owners wanted to site its headquarters in a neutral country.

Nord Stream has a total capacity of 55 billion cubic metres per year, enough to supply nearly 70 per cent of Germany’s gas demands.

GDF Suez, the French energy group, is also expected to take a 9 per cent stake in the venture, although this has not yet been completed.

Russia is also keen to press ahead with a second gas pipeline running via the Mediterranean to Greece, Italy and Southern Europe.

It has been dubbed South Stream, although it is running several years behind Nord Stream.

America has also been backing construction of another pipeline called Nabucco, which would bypass Russia and deliver gas from Central Asia and Iraq to Europe.

Copyright 2009. The Times. All rights reserved.


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