Russian gas producer Gazprom took its plans to diversify its entry points to the European gas market a step further, with an agreement signed late last month with Finland's Neste Oy.
The two companies have formed a 50-50 joint venture to build a pipeline to take gas from Russia into Finland and then on to Sweden and the European Union gas market.
A Neste official said that Russia currently exports 3.5 billion cu m/year of gas to supply Finland's domestic market. Under this agreement, Finland will increase its consumption to 4.5 billion cu m/year in the next few years.
"Gazprom is very keen to deliver more gas to western Europe," said the official, "but current central European export routes are insufficient and not without problems."
The venture's plan for the North European gas route is to lay a pipeline to carry about 45 billion cu m/year of Russian gas to the Nordic and European markets.
"The plan will probably mean another big pipeline in addition to the existing gas import line," said the Neste official. "Gazprom and Neste have had no concrete discussions about a route yet, but there is evidently an opportunity to build it through southern Finland to the west coast, across the Gulf of Bothnia to Sweden, and then southwards towards Europe."
The official said that a firm development cost had not been worked out yet either, but the project would certainly cost several billion dollars.
"The idea is that gas should begin flowing in 2005," said the official, "which means that a feasibility study cannot be too far away, if the study is to take about 2 years and building work is to begin in 1999 or 2000."
Swedish gas stake
Meanwhile, Neste is one of a group of European gas firms that has bought a total 49% share in the Vattenfall Naturgas subsidiary of Sweden's state electricity utility Vattenfall AB.
Germany's Ruhrgas AG and Norway's Den norske stats oljeselskap AS (Statoil) each have taken a 14.5% interest in Naturgas. Neste and Denmark's Dansk Olie & Naturgas AS (DONG) have each bought 10%.
Naturgas imports and sells natural gas from Denmark via its own high-pressure gas pipeline, which extends 320 km from Dragor, Denmark, across the strait to Sweden, coming ashore north of Malmo and extending north along the west coast to Gothenburg.
Burckhard Bergmann, Ruhrgas vice chairman, said, "The Swedish gas industry is still in its infancy. Participation in Vattenfall affords an opportunity to benefit from the potential growth of this market."
Sweden's industrial, commercial and residential markets are expected to grow as planned distrib-ution pipelines are installed in the country. Also, Sweden's government is pushing to close the country's nuclear power stations, so opportunities for gas-fired power projects are anticipated.
The Neste official said his company's stake in Naturgas fits with a strategy to become the dominant player in the northern European gas market: "With our interests in Finland and Russia, this makes an interesting triangle."
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