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UPDATE 2-Gazprom, European partners sign Nord Stream-2 deal
September 4, 2015 / 6:42 AM / in 2 years

UPDATE 2-Gazprom, European partners sign Nord Stream-2 deal

* Project to double existing Baltic pipeline’s capacity

* All companies mentioned as interested are on board

* Russia provides for about a third of EU energy needs (Adds U.S. reaction, paragraphs 1 and 5)

FRANKFURT/VLADIVOSTOK, Russia, Sept 4 (Reuters) - Russia’s Gazprom and its European partners signed a shareholders’ agreement on the Nord Stream-2 gas pipeline project that will run beneath the Baltic Sea to Europe, bringing Europe closer into Moscow’s energy orbit, a move criticized by the U.S. energy envoy.

Russia provides for around a third of EU energy needs, but around half of the gas the EU imports from Gazprom is shipped via Ukraine, with which Russia is in conflict. It wants to find new ways to deliver gas to Europe bypassing its neighbour.

Gazprom, E.ON, BASF/Wintershall , OMV, ENGIE and Royal Dutch Shell formed the new consortium for the project, a spokesman for the consortium said on Friday.

Gazprom is fighting to defend market share in Europe in the face of oversupplied gas markets, betting on rising long-term demand as Europe’s indigenous gas sources decline.

U.S. energy envoy Amos Hochstein said that, just like Russia’s previous plan for the South Stream pipeline that President Vladimir Putin abandoned last year, the Nord Stream-2 project is more about politics than economics.

“It carries the risk of allowing Gazprom to cut off Ukraine,” Hochstein said in an interview in Washington. And if that were to happen, it would be “devastating for Ukraine and damaging to European energy security as a whole, but particularly for Eastern and Central Europe,” he said.

Led by Gazprom, which has put the cost of the plan at up to 9.9 billion euros ($11 billion) and maybe less due to savings, the group is to build a third and fourth pipeline to transport up to 55 billion additional cubic meters of gas a year.

It would double the capacity of lines 1 and 2, which take the same route. The new pipelines are due to start transporting gas by the end of 2019. ($1 = 0.8985 euros) (Reporting by Katya Golubkova and Vera Eckert in Frankfurt, and Timothy Gardner in Washington; Editing by Tom Hogue, Georgina Prodhan and Jonathan Oatis)

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