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Construction Permit Granted to Nord Stream Pipeline Project - International Law Office

International Law Office

Energy & Natural Resources - Denmark

Construction Permit Granted to Nord Stream Pipeline Project

November 09 2009

Nord Stream Natural Gas Pipeline
Application of Espoo Convention
National Protests
Grant of Danish Construction Permit
Danish Approach

On October 22 2009 the Danish Energy Authority granted a permit to Nord Stream AG to construct the Danish section of its planned Nord Stream pipeline. The Danish construction permit was the first of five national permits to be granted for the construction of the Nord Stream pipeline in the Baltic Sea.

Nord Stream Natural Gas Pipeline

Nord Stream AG is a joint venture of four major companies: OAO Gazprom, BASF SE/Wintershall Holding AG, E.ON Ruhrgas AG and NV Nederlandse Gasunie.

The Nord Stream natural gas pipeline is planned to transport natural gas through the Baltic Sea from Russia to Germany for connection to the European energy grid. It will be 1,220 kilometres (km) long and will consist of two parallel lines. The first line, with a transmission capacity of approximately 27.5 billion cubic metres a year, is due for completion in 2011. The second line is due to be completed in 2012, doubling annual capacity to approximately 55 billion cubic metres. This is enough gas to supply more than 25 million households in Europe.

The total investment in the Nord Stream pipeline is projected at €7.4 billion.

Application of Espoo Convention

The Baltic Sea is surrounded by nine countries and is classed as a special ecosystem. It is used commercially for shipping, fishery and the production of raw materials by all of its surrounding countries. When it comes to implementing cross-border projects, the cooperation of all nine countries is of great importance for providing a balance between sustainable commercial use and safeguarding the Baltic Sea's uniqueness.

As the Nord Stream pipeline passes through the territorial waters and/or the exclusive economic zones of Russia, Finland, Sweden, Denmark and Germany, permits to construct and operate the pipeline must be obtained from each of these five countries. Moreover, as other countries around the Baltic Sea could also be affected, international consultations are underway with Poland, Lithuania, Latvia and Estonia.

National legislation generally requires an environmental impact assessment to be completed as a prerequisite for a national permit. In addition, Nord Stream has commissioned the so-called 'Espoo Report', which describes the potential environmental impacts along the entire pipeline route. The environmental impact assessments and the Espoo Report are based on a broad range of surveys, as well as data from independent experts and research institutions.

Since April 2006, Nord Stream has participated in a large number of Espoo consultation rounds, bringing together the Espoo focal points of all the Baltic countries. The designated country representatives have met regularly with one another and Nord Stream as the project developer to assess the progress of the preparation of the Espoo Report and discuss and coordinate further steps in the planning and approval procedures. In addition, Nord Stream has participated in more than 20 public hearings and taken part in numerous public discussions and expert seminars.

National Protests

The Nord Stream pipeline has been subject to intensive political protests in Eastern European countries, as well as in Sweden and Finland. These protests have been based on arguments regarding national security, environmental hazards from the pipeline, increased dependence on Russian natural gas in Western Europe and the disregard for the Eastern European countries' interest in having the pipeline pass through their land territory.

Such political protests have been mainly absent in Denmark. The Danish authorities have taken a more pragmatic approach to the application for the construction of the gas pipeline. They have dealt with the application strictly under domestic law and Denmark's international obligations under multilateral international conventions such as the United Nations Convention on the Law of the Sea and the Espoo Convention.

However, since the construction permit was granted, some politicians have criticized the grant, mainly on account of a lack of consultation with Eastern European countries.

Grant of Danish Construction Permit

On October 22 2009 the Danish Energy Authority granted a permit to Nord Stream to construct the Danish section of its planned Nord Stream pipeline. The pipeline will pass through 87.7km of Denmark's territorial waters and 49.9km of its exclusive economic zone.

As mentioned, the Danish construction permit was the first of five national permits to be granted for the Nord Stream pipeline. The construction permits for the four other countries through whose waters the pipeline will pass (ie, Russia, Finland, Sweden and Germany) are being dealt with by the respective national authorities.

Danish Approach

The Danish authorities are very experienced in evaluating large offshore projects. Determining the optimal route for the Nord Stream pipeline has been an evolving process. Several possibilities were investigated and carefully evaluated against many factors, including maritime traffic, fisheries, chemical munitions dumpsites, cultural heritage and environmental considerations. The final route alignment that runs east and south of the Danish island of Bornholm was decided upon in close dialogue with the Danish authorities. This route accommodates different interests while mitigating environmental impact.

For further information on this topic please contact Søren Stenderup Jensen at Plesner by telephone (+45 33 12 11 33), fax (+45 33 12 00 14) or email (ssj@plesner.com).

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