Denmark's decision to enact a new law to stop the Nord Stream II gas pipeline project from passing through its territorial waters is in contradiction with its previous recommendation that suggested that it should do so, according to Alex Barnes, the governmental relations advisor of the Nord Stream II AG, a subsidiary of Gazprom responsible for the project.
On Tuesday, Barnes told Anadolu Agency in an exclusive interview that most European countries support the project to carry Russian gas to Europe through the Baltic Sea while only a few countries object.
He said that permits are currently being sought for the project.
"We hope to get the permits in the next few months. It's basically just following all the rules, including environmental rules. Completion is expected in 2019 with commissioning by the end of 2019," Barnes said.
The project is proceeding on schedule and around 60 percent of the project's pipes have been manufactured, according to Barnes.
However, the project faced a recent stumbling block when Denmark announced a new law, which gave the country the authority to stop the passage of the pipeline through its territorial waters.
Barnes suggested that alternative route could be found, although it was too early to do so until a final decision is made on Denmark's route.
"Denmark is obviously one question mark, but the route choice for the Danish section of the project was based on Denmark's own advice regarding the Nord Stream I [the precursor to the Nord Stream II]. So, it was Denmark's advice that said you should follow this route through its territorial waters because it has the least impact on the environmental. Like any company, you look at alternative options for the route but it's too early to say and depends on what the final decision is," Barnes said.
Nonetheless, Barnes explained that the project has many energy heavyweights supporting the project with finance already in place from project partners Shell, OMV, Wintershall, Uniper and Engie. These partners are financing half of the project costs, he said.
- Concerns about the project
Barnes admitted that some countries expressed concern about the project based on worries that Russia would create a monopoly in Europe through the project. Barnes asserted however, that the Nord Stream II would actually help competitiveness in this gas market.
He said gas that flows via the Nord Stream II would have to compete with other gas supplies and other energy sources such as coal, nuclear and renewables in the European market.
"EU rules ensure that individual markets cannot be isolated. EU security of supply rules ensures plenty of interconnections between markets to enable gas to flow where it is required. All things being equal, if you have more pipeline gas, which is cheaper than LNG, it will have an effect on lowering the overall gas price to Europe. The Nord Stream II helps reduce wholesale European gas prices by enabling greater choice between imports," he said.
He asserted that by 2020, the project's benefits would amount to between €7.9 billion to €24.4 billion per year for countries in Europe and this would not be merely for one or two countries but all European countries.
"Gas prices will reduce for individual countries by between 4 percent an 32 percent per year by 2020, and by 5 percent to 31 percent per year by 2025," he said.
Furthermore, Barnes affirmed that European customers have more options as they can choose to buy pipeline gas from Norway, Russia, Algeria and the U.K. or alternatively, they can choose LNG.
European countries choose more pipeline gas than LNG because it is cheaper, but regardless, he said the balance of power is shifting towards a more diversified market.
- EC's draft law should be enacted only when needed
The EC's new draft law proposed on Nov. 8 stipulates that EU third party access or anti-monopoly legislation applies to offshore pipeline segments in EU territory.
Barnes advised that, although this is one of the European Union's better regulation principles, it should be applied only when absolutely necessary.
"You only regulate either when there is a failure or potential failure from competition. The EU should perform an Impact Assessment to see if this is the case," he said, adding "Personally speaking I disagree because we are already seeing competition between the different sources of supply to Europe."
- Objections to the project
Denmark passed a law at the end of November to permit the Danish foreign minister to ban Russia's Nord Stream II natural gas pipeline from traversing its waters.
The bill will allow foreign, security and defense policies to be considered as an argument in support of the ban when Denmark is to decide whether energy companies should be allowed to disconnect power cables and pipelines in Danish territorial waters.
In effect, the latest decision will permit the Danish government to decide whether Gazprom's Nord Stream II should be allowed through Danish waters.
The project also faces resistance from some European countries including Lithuania, Poland and Denmark.
The entry point of the Nord Stream II gas pipeline into the Baltic Sea will be the Ust-Luga area of the Leningrad Region in Russia from where the pipeline will stretch across the Baltic Sea to Germany.
The line's route passes through the Danish island of Bornholm, between Sweden and Poland.
The Nord Stream II is a 1,200 kilometer-long pipeline project, which aims to double the current capacity of 55 billion cubic meters per year for the Nord Stream pipeline.
By Murat Temizer