Signing up: Germany's Economy Minister Michael Glos signs a segment of the Baltic gas line, watched by Russian Prime Minister Mikhail Fradkov (left)
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Starter's orders for Baltic gas link
Work is set to start on the $5 billion North European gas pipeline, which will deliver Russian gas to Germany via a subsea link under the Baltic.
Officials including Prime Minister Mikhail Fradkov presided over the ceremonial welding of the first section of pipe at Babayevo in Russia's Vologda region, where the Baltic link will diverge from an existing trunk pipeline and head for the coast.
Gazprom has teamed up with Germany's E.on and Wintershall, part of BASF, to build the pipeline and is looking for a potential fourth partner, although it will retain a controlling stake of 51% in the project.
The onshore section of the pipeline will run 917 kilometres to the port of Vyborg, close to Russia's second city of St Petersburg. The 1200 kilometre subsea link will terminate at Greifswald in Germany.
The new pipeline consists of two pipes alongside each other, each carrying 27.5 billion cubic metres of gas per year. The first is expected to come on stream in 2010 and the second a few years later, bringing the maximum capacity to 55 billion cubic metres.
Germany imports around 40 Bcm of gas per year from Gazprom.
As well as boosting gas supplies to the European Union, which already gets around a quarter of its gas from Russia, the pipeline will allow Gazprom to bypass transit countries which could try to exert control over it.
The pipeline is a major part of Russia's drive to open up new energy export routes, which President Vladimir Putin has said is essential to stop its neighbours tying its hands and feet and being parasites on its economy.
Gazprom says the lack of intermediaries will also cut costs for European customers, since transit countries normally demand fees for gas supplies across their territory.
The company has said it may also build a branch to Sweden, and puts the cost of the undersea section alone at around 4 billion euros ($4.71 billion).
Gazprom plans to develop its South Russia field in Yamal-Nenets region to supply around 25 Bcm of gas to the pipeline a year.
The field has total estimated reserves of more than 1 trillion cubic metres, including 700 Bcm of proved reserves, and Gazprom says it will cost around 1 billion euros to bring it up to speed.