UPDATE 1-Nord Stream to finish 1st gas pipeline Thursday

Wed May 4, 2011 2:58pm BST

Quotes

   

* Pipeline 1 to be handed over for commercial ops in October

* Second pipeline to be completed April 2012

* Anchors biggest threat to operations

(Adds detail, comments)

By Henning Gloystein

LONDON, May 4 (Reuters) - Nord Stream is to finish laying its first 1,200 km (745 mile) pipeline on Thursday and prepare it to start shipping gas from Russia to Germany on schedule in October, the company said on Wednesday.

The 7.4 billion euro ($11 billion) project is aimed at replacing dwindling North Sea gas supplies and avoiding shipment through central Europe. It is owned 51 percent by Russia's Gazprom (GAZP.MM) and 15.5 percent each by Germany's E.ON Ruhrgas (EONGn.DE) and BASF-Wintershall (BASFn.DE).

Nord Stream is building two roughly parallel pipelines across the Baltic Sea with an overall annual capacity of 55 billion cubic metres (bcm).

"We will finish laying pipeline number one within the next 24 hours, following one year of work," Ruurd Hoekstra, the project's deputy director of construction, said.

Once the pipeline's three zones have been tied-up by divers and tested, it will gradually be filled with gas over four weeks, reaching commercial viability in October, he said. Pipeline one is designed to have an annual capacity of 27 bcm.

Hoekstra said Nord Stream had already begun laying pipeline two and expected to complete it by April 2012.

France's GDF Suez (GSZ.PA) and Dutch company Gasunie also hold minority stakes.

AVOIDING TRANSIT COUNTRIES

Countries that are being bypassed by Nord Stream such as Poland and Ukraine have voiced anger at this German-Russian cooperation at the cost of Central Europe.

But supporters, such as Germany's former Chancellor Gerhard Schroeder, say gas disputes between Russia and Ukraine, which affected supplies to western Europe in the past, proved the value of investing in the costly construction of Europe's longest sub-sea gas pipeline.

Nord Stream says the project will not make current gas trans-shipment through central Europe redundant, because the majority of its gas will be supplied by additional fields in northern Russia.

The extreme length of the pipeline made it necessary to divide it into three different zones, the company said.

Hoekstra said the technology had first been developed for construction of the 1,166 km Langeled pipeline, which opened in 2006 and transports gas in the North Sea from Norway to Britain.

Statoil Repair Club, a joint venture between all oil and gas companies operating offshore in the North and Baltic Seas, will be responsible for the tie-in of the three zones and subsequent maintenance and repairs.

Nord Stream said the biggest potential threat to operations comes from damage when ships lower their anchors. In the summer of 2007, an anchor hit Britain's CATS North Sea gas pipeline, causing a two-month disruption.

The company also said it planned to keep gas flowing during scheduled maintenance.

"One of the reasons why we are building two pipelines is so that we can do pipeline picking during maintenance work," Hoekstra said.

During construction, Nord Stream found several shipwrecks as well as World War II debris, especially off the coast of the German entry point near Greifswald, but fewer-than-expected old mines from the war off Russia and Finland.

"We ... even relocated an entire shipwreck for archaeologists, but the impact on construction was limited," Hoekstra said, (Editing by Jane Baird)