Commission wants second gas pipeline from Siberia

By Andrew Beatty

Date: 15/09/05

A highly controversial agreement to build a multibillion-euro gas pipeline between Russia and Germany will not dampen the need for further routes to be developed, the European Commission warned this week.

The comments will come as a relief to Poland and Ukraine who feared the Russo-German deal announced last week might scuttle plans to build a strategic and potentially lucrative second pipeline from Siberia to Poland via the Baltic states, a project known as Yamal II-Amber.

Commission sources said that they welcomed the Russo-German deal but added that the Yamal II-Amber pipeline should not be ruled out. "We think we need a second [pipeline]," said one official, "we will only be against a third or fourth."

The Polish government had hoped that a new Siberia-Poland pipeline would re-enforce its role as a transit route for Russian gas to Western Europe, ensuring a continuous supply of gas to Poland, despite frosty relations with Moscow.

Polish President Aleksander Kwasniewski accused Gerhard Schröder, the German chancellor, of undermining the EU's policy towards Russia by agreeing to the €4 billion pipeline which will bypass Poland.

The new TransBaltic - Vyborg to Greifswal - pipeline will bring 55 billion cubic metres of natural gas to northern Europe each year, or just over 10% of the EU's annual consumption.

The Commission is currently investigating the viability of the Yamal II-Amber project and is expected to report early in the New Year.

But while a largely positive assessment looks likely, problems still remain for the Poles.

Warsaw now hopes that the Commission will co-finance the Yamal II-Amber project with Polish gas firm PGNiG and companies from the Baltic states.

But the Commission looks likely to pour cold water on this idea.

"I would imagine that there would be a strong push from the Polish and others. We do not have many powers in that area," said one official. "Industry will have to decide."

And with three of Europe's largest infrastructure investors, the Russian giant Gazprom and German firms E.ON and BASF, heavily committed to the TransBaltic project, financing a new pipeline could prove difficult.

Warsaw is pressing the German centre-right election favourite Angela Merkel to reverse the decision if she is elected to office.

Senior figures in her party have criticised what they describe as Gerhard Schröder's failure to consult Poland and other allies about the plans, but have stopped short of a commitment to a reverse the decision.

Foreign policy adviser Wolfgang Schäuble last week indicated that a U-turn was unlikely. "The decision has been made: the pipeline will be built."

Article reports on the prospects for the construction of a gas pipeline from Russia to Poland, known as the Yamal II-Amber pipeline, after an agreement between Russia and Germany on a route for the so called TransBaltic pipeline, bypassing Poland.