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The Nord Stream approvals underscore the benefits of economic symbiosis

Author: Christopher Kenneth Section: Editorials

Issue: March 2010, Vol. 5, No. 2

Tags: Nord Stream

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Several years after its launch, Nord Stream — the Gazprom’s $10bln pipeline project designed to transport Russian gas directly to Europe and reduce the perennial third-party transit risks that had halted supplies in winter in the past — finally won the final approval from the last littoral state, whose national territorial waters the underground pipeline will eventually pass through on its way from Vyborg in Russia to Greifswald in Germany, and thereafter to other parts of Europe.

The Nord Stream environmental safety approval in February by Finland, the last of the four littoral states of Denmark, Sweden and Germany to give the project its green light, finally put an end to the efforts of some countries that have thrived as transit territories for the Russian gas en-route to consumers on the continent to sabotage the project. Notably, these countries, such as Ukraine, Poland and Baltic States, have openly protested against the pipeline’s construction, despite the fact that it will not transverse their territorial waters on the Black Sea. These countries and other Russophobes — both in and outside Europe that have politically been against the project, despite its unparalleled economic advantages and expected strategically vital role in safeguarding energy security on the continent — had hoped that the littoral states would kill the project on ecological grounds since their exaggerated economic and political arguments that the project will make Europe lopsidedly dependent on Russia had fallen on deaf ears.

Apart from innate political myopia and poor understanding of basic economic concepts, these people’s failures to see the benefits of such transit-free deliveries can only be explained by their traditional ‘Pavlovian reflex’ to anything Russian. The fact that Russia has been supplying gas to the continent for the past 60 years without disruptions is not an argument for these people. Ditto for the fact that some of the

biggest energy companies on the continent, namely, the Netherlands’ Gasunie and Germany’s Wintershall and E.On Ruhrgas, are co-shareholders with a 49% stake in the project, and hence can protect Europe’s interests. Similarly, the fact that other major European energy giants — such as Italy’s Eni and France’s Total are also parts of Russia’s other major energy pipeline projects such as the South and Blue Streams — is also usually overlooked.

However, the fact that the Nord Stream, the first of these several alternative energy routes to bypass unstable political regimes and anti-Russia sentiments in most transit states, was not intentionally sacrificed on the alter of political necessity means that holders of such anti-Russia views are in decreasingly lower number on the continent. Indeed, the fact that some statesmen even harbor the thought of sabotaging the project only underscores their poor understanding of the functionality of the gas industry. This is because unlike other industries, the gas industry does not only need the traditional business fundamentals - capital, human expertise and latest technologies, but also established creditworthy consumer markets to thrive. This why long-term contracts covering five to 20 or even more years are the norms, rather than exemptions in this industry.

In this context, and because of the huge capital-intensive resources needed to bring gas projects onstream and running profitably, Russia needs Europe for its wealthier energy consumption markets, just as Europe also needs Russia for its reliable energy supplies. This is a purely obligate mutualistic symbiotic relationship. The fact that the littoral countries have approved this project wholly on economic grounds means they fully understand the mutual benefits from such economic symbiosis in the 21st century. Therefore, it is largely hoped that this understanding will mark a new era in the relationships between Russia and its neighbors in Europe that will be built on the principle of jointly pursuing common causes rather than highlighting and exaggerating the differences between nations on the continent.