Nord Stream (also known as the Baltic Pipeline) stirs emotions in Europe - by Selene Rebane

The plans to build the politically and environmentally controversial Nord Stream pipeline have been in the air since 1997. With Finland and Sweden finally saying “yes” to the pipeline in their waters, the wheels of construction are now in full speed with the first line to be opened in the 2011. This will bring relief to Europe that is struggling with energy supply--yet not everyone is a winner.

The European Union accounts for 16% of the World's energy consumption but has only 6 % of the world's population. Natural gas comprises 24% of EU energy consumption. EU27 in 2007 consumed 505 bcm of natural gas per year according to Eurogas. This is expected to increase to 578 bcm by 2020 (estimations vary, some analysts claim that the gas consumption will decrease drastically). 40 % (128 bcm) of the natural gas is imported from Russia. The EU is also estimated to import 70% - 80 % of its energy supplies by 2030 as the North Sea gas supplies are diminishing; over 60 % of natural gas imports are expected to come from Russia. 10 % of the total EU gas demand would be covered by the Nord Stream. Natural gas will remain the fuel of preference for the EU because of its greener properties. In addition to that, phasing out nuclear power stations puts more strain on alternative energy sources. The pipelines that are running through Ukraine are aging and it is debatable at what capacity they would be running at by 2020: The EU offered Ukraine a loan of $2.5bn to revamp its pipeline infrastructure in March 2009, but it is debatable if this money went to pipeline upgrade projects as a proportion of that loan would have gone to repay existing gas debts to Russia; according to prime minister Tymoshenko, Ukraine would need an extra $3.5bn for the revamp of current pipelines.

The EU’s decision to lend $2.5bn was not welcomed by Russia, who said that it was “unprofessional” to make deals like this without consulting the main supplier (80 % of Russian gas exports currently go through Ukraine).

For more: The Oil Drum: Europe | What difference would Nord Stream mean to European energy supply?