OGZD.L Regulatory News (OGZD)

08.10.2012

Nord Stream second string commissioned, third and fourth strings next in turn

A festive ceremony dedicated to commissioning the second string of the Nord Stream gas pipeline took place today in the Portovaya Bay, the Baltic coast of Russia.

Taking part in the ceremony were Sergey Ivanov, Head of the Russian Presidential Administration, Alexander Novak, Energy Minister of the Russian Federation, Alexey Miller, Chairman of the Gazprom Management Committee, Matthias Warnig, Managing Director of Nord Stream AG, Harald Schwager, Member of the Board of Executive Directors of BASF, Gerhard Schroeder, Chairman of the Nord Stream AG Shareholders Committee, Bernhard Reutersberg, Member of the E.ON Board of Management, Jean-Francois Cirelli, Vice Chairman and President of GDF SUEZ and Paul van Gelder, President of Gasunie. Vladimir Putin, President of the Russian Federation, Angela Merkel, Chancellor of the Federal Republic of Germany, Francois Hollande, President of the French Republic and Mark Rutte, Prime Minister of the Netherlands addressed the public via video link.

"Nord Stream became a new link on the European energy map to increase the reliability of energy supplies. This was possible due to the alliance of the leading European gas and energy companies. The gas pipeline was constructed in no time.

Gazprom took great efforts on developing the Russian gas transmission system to deliver gas into Nord Stream. In the first place, the unparalleled Portovaya gas compressor station was constructed. Now we are bringing Portovaya to its full capacity, and it is becoming the most powerful compressor station in the world.

Today Nord Stream shareholders examined the preliminary results of the feasibility studies for the construction of the third and fourth strings and came to the conclusion that their construction was economically and technically feasible. By January 31 of the next year, it is planned to sign a memorandum on creating new gas transmission facilities across the Baltic Sea to Europe. One of the strings might be intended for delivering Russian gas to the United Kingdom. And we see interest in this project on the part of our British partners," said Alexey Miller.

"Russia and the EU will be able to use the optional modern and efficient supply route to make a direct connection between European markets and some of the world's largest gas reserves in Northern Russia. The Nord Stream pipes, manufactured with the use of cutting-edge technologies, have a service life of at least 50 years; they will make a considerable long-term contribution to energy security in Europe. We implemented this ambitious infrastructure project on schedule, within budget limits and with no expenses on the part of European taxpayers," said Matthias Warnig.

Background

Nord Stream is a fundamentally new route for Russian gas export to Europe. Running across the Baltic Sea waters from the Portovaya Bay (near Vyborg) to the German coast (near Greifswald) the gas pipeline stretches 1,224 kilometers.

The Nord Stream project is implemented by Nord Stream AG joint venture. The stakes in Nord Stream AG are currently distributed as follows: Gazprom holds 51 per cent, Wintershall Holding and E.ON Ruhrgas - 15.5 per cent each, Gasunie and GDF Suez - 9 per cent each.

Commercial gas supplies via Nord Stream's first string started on November 8, 2011.

The Nord Stream gas pipeline's second string laying ended ahead of schedule on April 18.

The annual gas throughput of Nord Stream will be 55 billion cubic meters after its two strings reach their design capacity.

The Gryazovets - Vyborg gas trunkline, constructed by Gazprom, is intended for securing gas deliveries from the Unified Gas Supply System to the Nord Stream gas pipeline and supplying consumers of Russia's Northwestern region. The gas trunkline length is around 900 kilometers with the design capacity of 55 billion cubic meters. The commissioning of the gas trunkline facilities is synchronized with those of the Nord Stream project. By now, the pipeline expansion has been completed through building of a loop lines system (total length is some 700 kilometers) and the necessary compressor capacities to deliver gas to the second string of Nord Stream, including the Portovaya compressor station.

The advanced practices of domestic companies and innovative technical solutions were utilized during the construction, thus ensuring high reliability, technical and economic efficiency and environmental safety. The domestically-manufactured pipes and shutoff valves of the new generation were used for the linear part of the pipeline. The pipeline crossings through watercourses were built using the horizontal directional drilling and microtunneling techniques, which makes it possible to avoid interference into river ecosystems during the construction and operation processes.

The Portovaya compressor system (CS), which ensures gas transmission via Nord Stream, is a unique facility in the global gas industry. Its aggregate capacity is 366 MW, its working pressure amounts to 220 Ata, gas transmission distance is above 1,200 kilometers. Gazprom utilized novel equipment and cutting-edge technologies in the CS construction. In particular, the CS comprises 6 gas compressor units (GCU) with the capacity of 52 MW and 2 GCU with the capacity of 27 MW. Moreover, the 52 MW units were utilized for the first time in the history of the Russian Unified Gas Supply System.