The Rise and Fall of the Nord Stream Pipeline: A Brief History

During the Cold War all Soviet gas exports to continental Western Europe took the route through a narrow corridor in Ukraine and Czechoslovakia. Of the capitalist countries, only Finland received Soviet gas through a separate pipeline.

However, both Europe and Moscow early on eyed the need for diversification of the routes. There were plans to build a pipeline through Poland and East Germany, which made perfect geographical sense. But politically, Poland was regarded as unreliable after the 1981 events there.

In the 1970s and 1980s Swedish gas visionaries negotiated with Moscow about extending the Finnish pipeline to eastern Sweden. But Sweden’s low electricity prices made gas unattractive. Today, Stockholm remains the only EU capital that is not connected to the European gas grid.

After the collapse of communism emerging Russia-Ukraine conflicts led to renewed interest in alternative supply routes. From October 1992 Gazprom disrupted flows to Ukraine. Ukraine, facing a debt crisis, was accused of stealing gas reserved for West European customers.

Major new pipeline capacities were taken into operation through Belarus and Poland, with EU support, in the late 1990s. But Russia viewed Belarus as a troublesome partner. In February 2004 Gazprom cut deliveries to Belarus, which had proven unable to pay for its gas.

Then came Ukraine’s Orange Revolution in winter 2004-2005. Gazprom and the Kremlin, along with the Germans, concluded that the time had now finally come to build the Baltic Sea pipeline, which would once and for all serve to make the gas trade independent of Belarus and Ukraine.

A Baltic Sea pipeline was of interest to Britain, too, which from the early 1990s became interested in Russian gas imports. Eastern Sweden, though, continued to be less fascinated by the prospects of Russian gas. Hence the Baltic Sea pipeline would have to circumvent Sweden.

In the 1990s and early 2000s there were different possible route under discussions, notably

1. From Kaliningrad to Denmark and Britain (found feasible in a 1992 study)

2. From Finland to Germany (found feasible in a 1997 study)

3. Directly from the St. Petersburg area to Germany

Gazprom and Finland’s Neste set up a joint venture called North Transgas to explore option #2. But eventually option #3 won out, because why bother to include Finland when you could do without such a small, insignificant, but potentially problematic transit country?

Greifswald/Lubmin in northeastern Germany was eyed as a perfect landing point. A huge old nuclear power complex was being shut down there following Germany’s reunification, and investors hoped to use the infrastructure at the site by replacing nuclear with gas power plants.

Britain hoped to become part of that system, through an extension of the pipelines through Germany and the Netherlands and onwards across the North Sea. In 2003 the UK and Russia signed a “bilateral energy pact”, part of which was devoted to this plan.

In September 2005 Gazprom (51%), Ruhrgas (24.5%) and BASF/Wintershall (24.5%) set up the North European Gas Pipeline Co. (NEGP). It was renamed Nord Stream AG in 2007. Subsequently further shareholders joined cheerfully joined the effort.

Preparations for actually laying the pipeline turned out to be immensely interesting for marine researchers and even marine archeologists. They happily accepted generous funding from Nord Stream for surveying the seafloor.

This generated new scientific insights, and the archeologists discovered numerous old wrecks from different centuries of Baltic Sea history, from Hanseatic vessels to ships that had been sunk during World War II.

In summer 2011 laying of the first Nord Stream 1 pipe was completed. Italian pipe-laying vessels did the job. The second of the two Nord Stream 1 pipes followed a year later.

The Central Europeans didn’t like the project. Poland’s foreign minister Radoslaw Sikorski acidly dubbed the project “the Molotov-Ribbentrip Pipeline”. The Scandinavians pointed to the environmental risks.

The other European leaders gathered in Lubmin on 8 November 2011 to ceremoniously and very happily inaugurate the system.

After Nord Stream 1’s inauguration the debate about it lost momentum for some time. The pipeline apparently operated smoothly.

The debate resurfaced in June 2015, when Gazprom and five European energy companies announced their agreement to build Nord Stream 2. The deal was very controversial due to Russia’s 2014 annexation of Crimea and support to separatist military forces in Donetsk and Luhansk.

A bad omen for the future came in early November 2015, when an unmanned underwater vehicle was found on the Baltic Sea floor, off the Swedish island of Öland, just next to one of the two Nord Stream I pipes. It was loaded with explosives.

The Swedish Armed Forces later confirmed that it was a Swedish military vehicle. It had gone astray during a military exercise held elsewhere in the Baltic Sea several months earlier. This was in the midst of the European refugee crisis and the event didn’t make many headlines.

There was a fierce debate about whether Nord Stream 2 was actually needed. Critics noted EU gas demand, after half a century of rapid growth, had reached a plateau level and even seemed to be set for decline. No future growth in demand was expected. So why build a new pipeline?

Proponents of Nord Stream countered by pointing out that natural gas had a key role to play in the European energy transition: Russian or not, natural gas was a flexible source of electricity that could compensate for irregularities in wind and solar electricity production.

Proponents of Nord Stream 2 also pointed to another critical trend: internal West European gas production was declining helplessly, especially in the Netherlands. Internal EU production collapsed during the 2010s, falling by nearly two-thirds (!). Who would cover the deficit?

The EU Commission’s answer was: “Let the market decide!” Since Russia offered the cheapest gas, its exports increased massively in the increasingly liberalized EU gas market. Russia’s share of EU imports climbed from 31% in 2010 to 40% in 2016 and then stayed on that level.

Over time, this growing Russian dominance made EU agencies and national governments increasingly suspicious (while gas companies remained happy). The EU commission changed its mind about Nord Stream 2.

There were also critics on the other side of the Atlantic. Already the Obama administration lobbied against Nord Stream 2. This served two purposes: preventing Russian geopolitical influence in NATO member states and boosting US shale gas exports to Europe.

In the meantime preparations for laying Nord Stream 2 started. Several Swedish coastal municipalities wished to become involved in the project logistics. The Swedish Foreign Ministry sought to prevent them, but in vain.

Starting in October 2017, 52,000 Nord Stream 2 pipes were brought to the port of Karlshamn in southern Sweden, for temporary storage. This meant a welcome additional source of income for the Swedes. In 2018 the pipes started to be lowered into the Baltic Sea.

Then, Donald Trump stepped up the drama by imposing sanctions on companies that were involved in planning and constructing Nord Stream 2.

in December 2019 Allseas, a pipelaying company contracted by Nord Stream 2, gave in to US pressure. It abandoned the project, pulled out its vessel and moved it to Kristiansand in southern Norway.

This could not stop the project. It merely delayed it. Nord Stream 2 contracted a Russian pipelaying vessel and completed construction in September 2021. An intense struggle followed: should the pipeline be allowed to become operational or not?

Completion of Nord Stream 2 coincided with federal elections in Germany, which brought to power not only the Social Democrats, but also the Liberals and the Greens, which were much more critical to Russian gas than Angela Merkel’s resigning government.

The decisive blow to the project came with Germany’s decision to suspend certification of the pipeline on 22 February 2022, as a punishment on Russia for recognizing Donetsk and Luhansk as independent republics.

Two days later, Russia launched a full-scale military assault on the rest of Ukraine, including Kiev. Nord Stream 2 filed for bankruptcy already on 1 March 2022.

In June the gas flows along Nord Stream 1 were reduced by 60% “due to renovation work” and in July it was totally shut down for maintenance. EU governments started to prepare for a winter without Russian gas.  

A turbine from one of the compressor stations was sent to Canada for technical overhaul, enabled by an exception from the sanctions. After 10 days this turbine was back in operation and the gas flow resumed, though only at the previous 40% level.

A week later the flow was reduced again to a mere 20% due to “technical problems” with one of the turbines. Shortly afterwards, on 31 August, the pipeline was fully closed due to “repair works” and more “technical problems” (Gazprom cited an oil leak in one of the turbines).

Then, on 26 September, several leaks in all four subsea pipelines were found in the Danish and Swedish economic zones. It quickly became clear that it was a result of violent sabotage. It remains to be seen whether Nord Stream 1 and 2 will ever go into operation again.

Map of Nord Stream 1 and 2, and the September leak (Wikipedia)