N European pipeline reaches the investment stage

Construction of the pipeline will start this year, and be completed in 2010, with the first section’s annual pumping capacity of 27.5 billion cum with the second section extending it to the designed capacity of 55 billion cum/yr.

The pipeline will link Russia and Germany via the Baltic Sea. Its 1200km-long route will not transit through third-party countries for transit, lowering transport costs and making it more reliable for export. The pipeline will cross Russia’s Vyborg region, go under the Baltic Sea, and emerge in Greifswald, in Mecklenburg-Western Pomerania, Germany. Offtakes may then be built under the Baltic Sea to link the pipeline with Russia’s Kaliningrad region, Finland, Sweden, Denmark, and the UK.

The agreement on the NEG project was signed on 8 September by Gazprom and German companies E.ON and BASF. According to the agreement, the parties will form the North European Gas Pipeline Co, in which Gazprom will own a 51% majority stake and BASF and E.ON will each have a 24.5% stake. Within the next few months the companies are scheduled to sign detailed contracts on the NEG project, and Gazprom plans to begin construction of a section of the pipeline to Vyborg in the fall.

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