Gazprom: Nord Stream 2 cost would rise by 'hundreds of millions' to bypass Denmark

MOSCOW (Reuters) - An alternative route bypassing Danish waters for the construction of the undersea Nord Stream 2 gas pipeline would cost “hundreds of millions of dollars”, the chairman of Russian gas company Gazprom told Reuters.

FILE PHOTO: A worker puts a cap to a pipe at the construction site of the Nord Stream 2 gas pipeline, near the town of Kingisepp, Leningrad region, Russia, June 5, 2019. REUTERS/Anton Vaganov/File Photo

The comments by Viktor Zubkov mark the first time Gazprom has conceded that the project would run up significant costs by making a detour around Denmark.

In a letter obtained by Reuters in August, the pipeline operator said the project could be delayed by up to eight months and incur further costs of 560 million euros ($615 million) due to hurdles in securing permits from Denmark.

The initial budget was 9.5 billion euros.

Zubkov, speaking on the sidelines of an energy conference in Moscow this week, also said Gazprom was hopeful that Denmark would still allow it to run the pipeline through its waters.

Of all the countries through which Gazprom is building the pipeline to Germany under the Baltic Sea, Denmark is the only one yet to approve the project.

Nord Stream 2 faces resistance from some European countries and the United States, which say it would enhance Europe’s dependence on Russian energy supplies.

The project would double the capacity of the existing Nord Stream pipeline from Russia to Germany to 110 billion cubic meters a year and allow Russia to bypass Ukraine, currently its main transit route for European sales.

“The increase (in costs) would be in hundreds of millions of dollars,” Zubkov said in reference to circumnavigating Denmark.

Russian President Vladimir Putin urged Denmark on Wednesday to ignore U.S. pressure and “show it has sovereignty” by allowing Nord Stream 2 to go through its territory.

Aside from Gazprom, half of the funding for Nord Stream 2 is being provided by Germany’s Uniper and BASF’s Wintershall unit, Anglo-Dutch company Shell, Austria’s OMV and France’s Engie.

Reporting by Vladimir Soldatkin; Editing by Dale Hudson