Sweden, Finland OK Baltic Sea gas pipeline project

Sweden and Finland on Thursday approved a Baltic Sea pipeline project that would ship Russian natural gas to Germany, clearing two key obstacles for construction to begin next year.

Sweden said the euro7.4 billion ($11 billion) Nord Stream project met its demands to protect the marine environment, while Nordic neighbor Finland approved the construction with the caveat that builders must supply additional information about the environmental impact to a regional authority.

The twin pipelines, which were approved by Denmark last month, also need the green light from authorities in Russia and Germany. That is expected to be a formality, since the project is backed by both governments.

Once completed, the two 750-mile (1,200-kilometer) pipelines would carry a total of 55 billion cubic meters of gas a year from the Russian port of Vyborg to the German port of Greifswald. Construction is expected to start next year, with the first pipeline planned to be ready for deliveries in 2011.

Moscow wants to use Nord Stream, and a mirror project South Stream in southeastern Europe, to strengthen its grip on European gas markets and head off a U.S.-based pipeline project, Nabucco, that would bypass Russia.

Russia also wants to invest in pipelines that do not cross its neighbor, Ukraine. Moscow depends heavily on Ukrainian pipelines to get its gas to Europe and the two rivals have been at odds for years over energy issues. Russia cut off gas supplies to Europe for two weeks in January amid a pricing dispute with Ukraine.

Swedish Environment Minister Andreas Carlgren - who last year expressed concerns about the project's impact on ecosystems in the Baltic Sea - said authorities in his country are satisfied with additional information supplied by pipeline builder Nord Stream AG, which is based in Zug, Switzerland. He told reporters in Stockholm that saying "no" to the project would "contravene international law."

It was feared that the construction would disrupt fish stocks and sea birds in the Baltic Sea and release toxins from munitions and chemical weapons sprinkled across the sea bed from earlier wars.

In Finland, the government gave conditional consent for the pipeline, saying Nord Stream must address environmental concerns of a regional authority that has jurisdiction over marine areas near the planned pipeline.

In a letter to Russia's environment ministry on Oct. 16, local officials demanded more details about protective measures pipeline constructers plan to take when exploding old mines and munitions on the seabed.

The southern Finland regional authority expects to make a decision in January, after it receives a reply from Moscow.

The project also has met objections in Poland and other countries that currently get transit fees from Russian gas crossing their territory in land-based pipelines. In 2007, Estonia refused to let the pipeline to run through its waters.

Under current plans, Nord Stream would go through the territorial waters of Russia, Germany and Denmark and through international waters that are part of the exclusive economic zones of Finland and Sweden.

A 300-mile (480-kilometer) stretch of the pipeline would pass through Sweden's economic zone and 230-mile (375-kilometer) section would be in Finland's economic zone.

Russia's natural gas monopoly Gazprom holds a 51 percent stake in the project, while German energy companies E.ON Ruhrgas AG and Wintershall AG each hold 20 percent. Dutch company Nederlandse Gasunie NV holds the remaining 9 percent.

"We are delighted with today's decisions made by the Swedish and Finnish governments," Nord Stream Managing Director Matthias Warnig said in a statement. "These two permits are further significant milestones for our project and Europe's security of supply."

Nord Stream spokesman Steffen Ebert said Germany is expected to formally approve the pipeline in December.

Sergei Pikin, director of the Energy Development Fund, said there is no doubt of Russia's backing.

"Russia has already approved the project de facto - it just needs to formalize it. The fact that (Prime Minister) Vladimir Putin is personally involved means that approval will take about five minutes," Pikin said.

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Associated Press Writers Gary Peach in Moscow, Geir Moulson in Berlin and Matti Huuhtanen in Helsinki contributed to this report.

(This version CORRECTS ADDS cost of project in euros, corrects dollar coversion, graf 2)