All Eyes on Sweden as Nord Stream Ends Public Referral Period

The public referral period on the Nord Stream natural gas pipeline in Sweden ended on Friday (21 August), thus again providing an occasion for the multiple parties with stakes in the project to raise their opinions and expectations for Nord Stream. The public referral process was launched in a number of Baltic basin countries earlier this year (see Related Articles) in conjunction with the preparation of an Environmental Impact Assessment (EIA). This move was an attempt by the Nord Stream consortium to improve the public image of the project and to speed up the process of obtaining the environmental permits required for the construction of the pipeline. As one of the countries whose exclusive economic zones the pipeline is planned to cross, the approval of the Swedish government is absolutely crucial if Nord Stream is to be realised. In early 2008, the Swedish government rejected Nord Stream's application, saying it was incomplete. In October 2008, Nord resubmitted its application, and the outcome of the consultation is expected to have a profound impact on the decision of the government.

The end of the public consultation was positively noted by the Nord Stream AG, the consortium behind the pipeline, which is led by Russia's Gazprom, but also includes Germany's BASF/Wintershall, E.ON Ruhrgas, and Gasunie. In an official press release, Lars O. Grönstedt, Nord Stream's Senior Management Advisor in Sweden characterised the public referral period as "an important milestone in our project," noting that about 60 institutions filed their final comments on Friday, thus opening the door for the Swedish Ministry of Enterprise, Energy and Communications to start preparing a decision on Nord Stream's permit application. Sweden's timely decision is deemed vital if the project, which is designed to carry 55 bcm/y and to run from the Russian port of Vyborg to Greifswald on the German coast, passing through the territorial waters or exclusive economic zones of Russia, Finland, Sweden, Denmark, and Germany and indirectly affecting those of Lithuania, Latvia, Estonia, and Poland, is to meet its start-up deadline of 2011.

Opposition Gaining Momentum

However positive the expectations of the consortium may be, the initial reactions following the referral do not appear to justify great optimism. Immediately after the consultation ended, some reports in Swedish and other Baltic region media informed that the authorities of the Swedish island of Gotland, which holds regional status according to the Swedish administrative system, and which lays in immediate proximity to the planned Nord Stream route, have refused to support construction of the pipeline. Despite the fact that the Swedish government system is fairly centralised, and that the ultimate decision over the permit lays with the Ministry of Enterprise, Energy and Communications, the negative reaction of the regional authorities is expected to have significant influence over the final decision makers. In fact, most reports in Swedish media already indicate that two of the political parties in the governing coalition, namely the Moderate Party, which is the largest in the governing centre-right Alliance for Sweden, and the Centre Party, are altering their initial supportive positions and will most likely object against the licensing of Nord Stream on the basis of the lack of support in Gotland.

While storm clouds appear to be gathering over the future of the project in Sweden, some of the staunchest adversaries of Nord Stream elsewhere are seizing the opportune moment to put further pressure on the project. Speaking at a press briefing in the European Parliament yesterday the Lithuanian President and former European Commissioner responsible for financial programming and budgetary matters Dalia Grybauskaite launched a strong verbal attack against the Russian-backed project. According to EurActive, when asked whether Nord Stream was still a European priority, she answered with assertiveness that this is the first time she heard that Nord Stream was a priority for the EU. Her position was further backed by the recently elected president of the European Parliament and former Polish Prime Minister, Jerzy Buzek, who reiterated the view that Nord Stream is not a priority for the EU. These comments further substantiated the consensus between Poland and Lithuania, along with the other two former Soviet republics Estonia and Latvia, against the project. The four states have long opposed Nord Stream, citing the potentially devastating impact it could have of the ecosystem of the Baltic Sea. Nevertheless, it is universally understood that the major drivers for their opposition are economic and political considerations as they perceive Nord Stream to be an infringement on their energy security and an attempt by Russia to leverage its energy resources as a political weapon.

Outlook and Implications

The hostility towards Nord Stream on behalf of states like Poland and Lithuania is by no means news to those backing the pipeline. In fact, a lot has been done in order to minimize the influence of the Baltic States and Poland over the final decision for the project as the Nord Stream consortium changed the proposed route for the pipeline on a number of occasion in order to avoid crossing the exclusive economic zones of either of these states, and in this way, to avoid giving them a veto power. This approach however, gave this veto power, to a number of other states, namely Finland, Sweden and Denmark, which have been deemed by Russia, and its German and other western European partners easier to negotiate with, or at least open to accept improvements in the pipeline plans that would take into consideration legitimate environmental concerns. In July this year, Finland gave Nord Stream a green light in environmental licensing, and this raised the hopes that Sweden, and subsequently Denmark, would follow suit in time for the successful completion of the project according to schedule. Nevertheless, the refusal of the authorities in Gotland to support the project, and the ensuing change in the position of leading political parties in Sweden, poses a real danger of substantial delays, and even failure for Nord Stream.

The situation is further complicated due to the fact that Sweden currently holds the presidency of the European Union (EU). This combination of circumstances have actually put the state in the position of de facto veto holder for the project. Earlier on, the Energy Commissioner, Andris Piebalgs, had on a number of occasions expressed the support of the Commission for Nord Stream, which prompted discontent amongst opponents of the project within the EU. In this context, the statements of both Grybauskaite and Buzek could be interpreted as an attempt to take advantage of the Nord Stream's misfortunes in Sweden and to further pressure the government there to back off the project as it clearly lacks pan-European support.

On the other side, Nord Stream's supporters have also recently been active in putting pressure on the Swedish decision. Joint meetings between Russian President Dmitry Medvedev and the German Chancellor Andrea Merkel, as well as the decision to bring France on board of the Nord Stream coalition by entertaining the proposal of giving GDF Suez a 9% stake in the consortium were all steps, which to a certain degree carried a message towards the Swedish presidency that European support for the pipeline is strong. All these have put Sweden in a precarious position, and in all likelihood the Swedish government will face an intense autumn in the wake of the decision for Nord Stream's environmental licence. Whatever the final decision may be however, in a typical Swedish fashion, it will probably be carefully calculated.

Related Articles

• Finland - Russia - Europe: 3 July 2009: Nord Stream Receives Approval from Finnish Environmental Watchdog
• Europe - Russia: 10 June 2009: Baltic Basin Countries Voice Concerns over Russian-Backed Nord Stream Pipeline
• Russia - Europe: 16 March 2009: Nord Stream Addresses Public on Environmental Reports
• Sweden: 1 November 2007: Sweden Calls for Further Environmental Studies on Nord Stream Pipeline