Nord Stream pipeline gets nod from Sweden, Finland

By Simon Johnson

STOCKHOLM (Reuters) - A plan by Russian-German consortium Nord Stream to build a gas pipeline under the Baltic Sea cleared two major hurdles on Thursday as Sweden and Finland signed off on construction in their waters.

Nord Stream has raised fears both among environmental groups, who are worried about the impact on the Baltic Sea, and countries such as Poland, Ukraine and the Baltic states which view the project as a threat to their energy security.

"The basic risk is that once it becomes operational Russia could stop deliveries to Poland without affecting its key client, that is Germany," said Przemyslaw Wipler, a former top oil expert in the Polish government.

European Union officials have backed the pipeline because it means the bloc, while still heavily dependent on Russia for energy needs, would be less at risk of supply disruptions due to Moscow's running dispute with Kiev.

A standoff between Russia and Ukraine late last year left hundreds of thousands of people temporarily without gas and European officials are concerned a conflict could flare again.

"These steps make the pipeline more likely, but still there is a long way to go," Wipler said, noting that for Warsaw the worries begin in earnest once construction starts. That could lead to Poland having to buy Russian gas via Germany.

Jubilant Russian Prime Minister Vladimir Putin, who has personally lobbied for the construction of Nord Stream in the last few years, thanked Sweden and Finland for their decisions at a government meeting in Moscow.

STRICT CONDITIONS

Environmentalists had raised concerns that pipeline construction could damage the floor of the Baltic Sea and dredge up hazardous munitions that lie there.

Sweden said Nord Stream had met strict environmental requirements. "According to national authorities the impact on the Baltic Sea's environment is very limited and only prevalent for a short while in connection with the construction work," Environment Minister Andreas Carlgren said

Finland saw no grounds for opposing the pipeline, which will deliver 55 billion cubic meters of gas per year from Russia to Germany, although final approval from Finnish environmental officials is still needed.

Their decision is due by the end of 2009.

Denmark gave its assent last month, leaving Russia and Germany as the last countries to sign off. A Nord Stream spokesman said their decisions were expected by the end of 2009.

Nord Stream, comprised of Russia's Gazprom, Germany's BASF and E.ON, has said construction of the pipeline should begin in April, with operations set to begin by the end of 2011.

A second line should be completed in 2012.