EU must push Baltic Sea gas link to meet 2011 goal

By Vera Eckert - Analysis

FRANKFURT (Reuters) - The European Union needs to push harder to get the Nord Stream pipeline project to pump Russian gas to Europe by the end of 2011 as planned, analysts say.

The key Nord Stream project to bring gas from Siberia via the Baltic Sea to Germany has been delayed for years because of concerns over its environmental impact and fears that it might harm the interests of some eastern European countries.

A consortium of companies from three nations formed in late 2005 still plans to send up to 55 billion cubic meters (bcm) of gas a year through the 746 mile subsea link, bypassing eastern Europe across which Russian gas now flows to the EU.

Nordic and Baltic states are concerned the pipeline could harm the local environment -- fears that could be partly offset by Russia's Gazprom (GAZP.MM), Germany's E.ON Ruhrgas (EONGn.DE) and Wintershall (BASF.DE) and Dutch Gasunie sharing some of the spoils of their new energy link.

"It is a political task for the EU to make Nord Stream a part of a wider energy plan for the bloc. It may have to include more partners," said Florian Haslauer, analyst at the A.T. Kearney consultancy, referring to both companies and countries.

"Nord Stream is a must, otherwise we would have to change our entire energy supply around, and that won't work before 2020," he said.

A.T. Kearney said in a recent study that European demand for imported gas is set to rise to 250 bcm by 2020, double the amount of gas imported in 2005.

European gas production is expected to continue falling while demand for the fuel will keep rising, especially from the power generation sector, the consultants said, adding that at least two more gas import pipelines were needed to meet demand.  Continued...