Nord Stream (former names: North Transgas and North European Gas Pipeline) is a planned natural gas pipeline from Russia to Germany. The name of Nord Stream refers usually to the offshore section of this pipeline between Vyborg and Greifswald, but sometimes it may have wider meaning, which includes onshore section in Russia and further connections in the Western-Europe. The project is highly controversial, for both environmental concerns and national security risks.
History
The project started in 1997 when Gazprom and the Finnish company Neste (later Fortum) formed a joint company, North Transgas Oy, for construction and operation of a gas pipeline from Russia to Northern Germany across the Baltic Sea. The German partner in this project was Ruhrgas (later E.ON). In April 2001, Gazprom, Fortum, Ruhrgas and Wintershall adopted a statement regarding a joint feasibility study for the pipeline. On 18 November 2002, the Management Committee of Gazprom approved a schedule of project implementation. In May 2005, Fortum withdrew from the project and sold its 50% stake in North Transgas to Gazprom. As a result, Gazprom became the 100% owner of North Transgas Oy. On 8 September 2005, Gazprom, BASF and E.ON signed a basic agreement on the construction of a North European Gas Pipeline. On 30 November 2005, the North European Gas Pipeline Company (later Nord Stream) was incorporated in Zug, Switzerland. On 9 December 2005, Gazprom started construction of the Russian onshore section of the pipeline. On 30 March 2006, the shareholders’ committee of the North European Gas Pipeline Company held its first meeting. On 4 October 2006, the pipeline and the operating company were officially renamed Nord Stream.[1]
Technical features
Russian onshore section
Construction of the Russian onshore section began on 9 December 2005 in the town of Babayevo (Vologda Oblast), and is slated for completion in 2010. The onshore section in Russia will run from Gryazovets to the coastal compressor station at Vyborg. The length of this section will be 917 kilometres (570 mi), the diameter of the pipe is 1,420 millimetres (56 in) and working pressure will be 100 atm (10 MPa), which will be secured by six compressor stations. The Russian onshore section will also supply gas to the Northwestern region of Russia (St. Petersburg and Leningrad Oblast), including to the planned Baltic LNG plant at Primorsk. It will be constructed and operated by Gazprom.[2] According to the Finnish natural gas company Gasum, a branch pipeline in Karelia will connect the onshore section of the pipeline to Finland.[3]
Baltic Sea offshore section
The offshore section of pipeline is being ordered and will be operated by Nord Stream AG, a joint company owned by Gazprom (51% of shares), BASF and E.ON (both 20%), and N.V. Nederlandse Gasunie (9%).[4][5] It will run from Vyborg compressor station at Portovaya Bay along the bottom of the Baltic Sea to Greifswald in Germany. The original length of the subsea pipeline was planned to be 1,196 kilometres (743 mi), of which 3 kilometres (2 nmi) in Russian inland, 12 nautical miles (22 km) in Russian territorial waters, 96 kilometres (52 nmi) in the Russian economic zone, 396 kilometres (214 nmi) in the Finnish economic zone, 482 kilometres (260 nmi) in the Swedish economic zone, 37 kilometres (20 nmi) in the Danish economic zone, and 112 kilometres (60 nmi) of the zone disputed between Poland and Denmark, 33 kilometres (18 nmi) in the German economic zone and 33 kilometres (18 nmi) in German territorial waters and 0.5 kilometres (0.3 nmi) in German inland. However, on 21 August 2007 Nord Stream decided to re-route the pipeline to run north of Bornholm through the Danish economic zone and territorial waters, which will avoid the disputed territory between Denmark and Poland.[6][7][8][9] Nord Stream still studies alternatives south of Hogland and south-east of Gotland.[7]
The plan is to build two parallel gas pipeline legs each with capacity of 27.5 billion cubic metres (bcm) per year. The diameter of the pipe will be 1,220 millimetres (48 in), the wall thickness 38 millimetres (1.50 in) and the working pressure 220 bar (22 MPa).[5] There will be a service platform in the Swedish economic zone, 90 kilometres (56 mi) to north-east of Gotland island. The size of the platform will be 30 by 30 meters (9,500 ft square) and it will rise approximately 35 meters (115 ft) above the sea. The platform is to be used for maintenance and service of the pipelines, including launch and reception of testing and diagnostic equipment, control of gas parameters, and placement of isolation equipment (valves).[10] The first leg to be built in 2009-2010 and the second one in 2010-2012.[11] The first gas delivery is scheduled for the spring of 2011.[12]
For the construction period, Nord Stream AG is planning to create a logistic center in Gotland. For this purpose Nord Stream AG is ready to finance the reconstruction of the Slite harbor.[13] The design engineering of the subsea pipeline is being done by Snamprogetti and the pipeline will be constructed by Saipem.[14][15] The pipes for the first leg of the pipeline will be provided by the German company EUROPIPE (Mülheim an der Ruhr), and the Russian pipe mill OMK (Vyksa).[16]
Western European part
The Western European part of the pipeline project includes two transmission pipelines in Germany. The southern pipeline (OPAL pipeline) will run from Greifswald to Olbernhau near German-Czech border. It will connect Nord Stream with JAGAL (connected to the Yamal-Europe pipeline), and STEGAL (connected to the Russian gas transport route via Czech and Slovak republics) pipelines. The western pipeline (NEL pipeline) will run from Greifswald to Achim, where it will be connected with the Rehden-Hamburg gas pipeline.[17] Together with the MIDAL pipeline it will create the Greifswald–Bunde connection. Further gas delivery to the UK will be made through the planned connection between Bunde and Den Helder, and from there through the offshore interconnector Balgzand–Bacton (BBL Pipeline). Gazprom has also bought an abandoned mine (Hinrichshagen Structure) in Waren, which is planned to convert into the largest underground gas storage in Europe with capacity of 5 bcm.[18][19]
However, the German regulator has agreed to grant permits for construction of NEL and OPAL pipelines only if they are constructed as a part of a natural gas transmission grid with access given to third parties — something that is opposed by Nord Stream's partners.[20] For the same reason, a similar problem faces Gazprom's plan to build a 0.5 bcm underground gas storage facility in the Campine area, near Antwerp, which was designed to ensure Russian gas deliveries to Western Europe and was planned to be used in connection with the Nord Stream.[21]
Natural gas supply sources
The main source of natural gas for the Nord Stream pipeline will be Yuzhno-Russkoye field, which is located in the Krasnoselkupsky District, Yamal-Nenets Autonomous Okrug, Tyumen Oblast. The licence for the Yuzhno–Russkoye field is owned by Severneftegazprom, the subsidiary of Gazprom. BASF and E.ON are minor shareholders in Severneftegazprom. The proven reserves of Yuzhno–Russkoye are 800 bcm and estimations are more than 1000 bcm of natural gas. The planned capacity of Yuzhno–Russkoye is about 25 bcm of gas per year.
Nord Stream will be fed additionally from fields in Yamal Peninsula, Ob-Taz bay. Gazprom has also indicated that the majority of gas produced at the Shtokman field would be sold to Europe via the Nord Stream pipeline. For this purpose, the pipeline from the Shtokman field via Kola peninsula to Volkhov or Vyborg in the Leningrad Oblast has to be built.[22]
Contracts to supply gas through the Nord Stream
On 13 October 2005 Gazprom's export arm Gazprom Export signed a contract with German gas company Wingas, a joint venture of Gazprom and Wintershall (subsidiary of BASF), to supply 9 bcm of natural gas annually for 25 years following the pipeline's launch in 2010.
On 16 June 2006 Gazprom and Danish DONG Energy signed a 20 year contract for delivery of 1 bcm Russian gas annually to Denmark with the option to increase the annual quantities. Under the agreement, Gazprom will start supplying gas in 2011. In addition, DONG Energy will start supplying 0.6 bcm natural gas annually to a Gazprom subsidiary Gazprom Marketing and Trading (UK).[23]
On 29 August 2006 Gazprom and E.ON Ruhrgas signed an agreement to extend current contracts on natural gas supplies and have signed a contract for an additional 4 bcm of annual gas supply through the Nord Stream pipeline.
On 19 December 2006, Gazprom and Gaz de France agreed to an additional 2.5 bcm gas supply via the Nord Stream, starting from the end of 2010.[24]
Costs and financing
The costs of this project remains unclear. According to Gazprom, the overall costś of the project—including the onshore pipelines on Russian and German territory—could be around EUR 12 billion, while the pipeline's offshore section is expected to cost EUR 6 billion.[9][25][26] However, Nord Stream AG announced on 13 December 2007, that it will revise the project's costs in early 2008 due to an increase in steel prices. According to Gerhard Schröder, the chairman of Nord Stream AG, the offshore pipeline will cost EUR 8 billion, while BASF expects that the figure may rise to EUR 9 billion.[27]
Approximately 30% of the financing will be through equity provided by shareholders in proportion to their stakes in the project, and 70% will be from external financing by banks.[28] The financial advisers for external financing are Société Générale, ABN Amro and Dresdner Kleinwort.[4] The European Investment Bank (EIB) has been considered as one possible major financing partner.[29] However, according to the President of the EIB Philippe Maystadt, EIB funding is unlikely because of opposition from several member states.[30]
Environmental impact assessment
The Nord Stream pipeline construction is a subject to the environmental impact assessment in accordance with the Espoo Convention and national legislation of concerned countries, and HELCOM recommendations. In mid-November 2006, the official notification of the project was sent to Russia, Finland, Sweden, Denmark and Germany, as parties of origin (the countries whose exclusive economic zones and/or territorial waters the pipeline is planned to pass through), as well as to Poland, Latvia, Lithuania, and Estonia as affected parties. Originally Nord Stream AG wanted the work on the environmental impact assessment report to be finished by mid-2007 and to get the final environmental impact assessment approval at the beginning of 2008.[5] These expectations have been called "extremely optimistic" by Finnish environmental authorities, and Swedish environmental authorities have said that environmental work might not be able to be carried out in 2007 as approval for the tests was required from all the countries bordering the Baltic Sea through which the pipeline will pass.[31] The new date for the environmental impact report is scheduled in April 2008.[32]
Russia's Federal Service for Ecological, Technical and Atomic Safety (Rostekhnadzor), said on 5 April 2007 that it had found both the Russian onshore ana offshore sections of the route environmentally safe.[33]
Controversy
The pipeline project has drawn criticism internationally, most strongly from Poland, Sweden, the Baltic countries, the United States and some environmental organizations (such as the World Wide Fund for Nature).[34]
Political aspects
Opponents have seen the pipeline as a move by Russia to bypass the transit countries (currently Ukraine, Slovakia, Czech Republic, Belarus and Poland).[35] Some transit countries are concerned that a long term plan of the Kremlin is to attempt to exert political influence on them by threatening their gas supply without affecting supplies to Western Europe.[6]Cite error: A <ref>
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(see the help page).
Security and military aspects
Swedish military experts and several politicians, including former Minister for Defence Mikael Odenberg, have stated that the pipeline can cause "a security policy problem" for Sweden and warnings have been raised about Russian espionage and military friction. Odenberg said "We get a pipeline that motivates Russian navy presence in our economic zone and the Russians can use this for military intelligence should they want to. Of course that is a problem". He also stated that the Swedish government has very limited opportunity to influence the project, except for the environmental aspects.[36] More political concerns were raised when Russian president Vladimir Putin stated that the ecological safety of the pipeline project will be ensured by using the Baltic Fleet of the Russian Navy.[37]
Deputy Chairman of the Board of Executive Directors of Gazprom Alexander Medvedev has dismissed these concerns, stating that "Some objections are put forward that are laughable— political, military or linked to spying. That is really surprising because in the modern world ... it is laughable to say a gas pipeline is a weapon in a spy war."[38]
Economic aspects
Russian and German officials claim that the new pipeline would eventually lead to economic savings, despite the high investment cost. Two reasons given were the elimiation of transit fees (as transit countries would be bypassed), and that an offshore pipeline has a higher operating pressure which leads to lower operating costs (by eliminating the necessity for expensive midway compressor stations.[28]. Observers speak of one billion dollars annually which will be lost by transit countries.
People who are against the project have tried to manipulate the facts by asking if whether any savings will be gained, as the maintenance costs of a submarine pipeline are significantly higher than for an overland route. In 1998, former Gazprom chairman Rem Vyakhirev claimed that the project was economically unfeasible.[39] But prices have dramatically increased for gas since 1999, in 2008 the price for 1000 cubic meters of gas was 350 dollars compared with the price in 1998 which was 60 dollars per 1000 cubic meters [40]
Environmental aspects
Environmental concerns raised are that the construction of the pipeline would disturb the sea bed, dislodging mines and toxic materials including chemical munitions and other items dumped in the Baltic Sea during and after World War II, and thereby damaging the Baltic's particularly sensitive ecosystem.[41][42] Harri Helenius, Finland's ambassador to Russia, warned that because of pollution in the Gulf of Finland, toxic substances could surface from the seabed during construction.[43] On 31 October 2007, Swedish Environment Minister Andreas Carlgren demanded "that the environmental analysis should include alternative ways of taking the pipeline across the Baltic". According to Carlgren, the pipeline is projected to be passing through areas considered environmentally problematic and risky, where there are mines, chemical waste and chemical weapons.[44] Carlgren was supported by Sweden's three opposition parties calling for an examination of the possibility of rerouting the pipeline onto dry land.[43] Environmental groups have been campaigning to consider the more southern route, claiming that the sea bed is flatter and so construction would be more straightforward, and therefore potentially less disruptive to waste, including dioxin, littered on the sea bed.[45] The World Wide Fund for Nature has said it might file a court case against Nord Stream AG if the company did not properly assess a potential alternative route on the southern side of Hogland. According to Nord Stream AG, this is not suitable route for the pipeline because of the planned conservation area near Hogland, subsea cables, and a main shipping route.[46]
The impact on bird and marine life in the Baltic Sea is also a concern. Swedish environmental groups are concerned that the pipeline is planned to pass too closely to the border of the marine reserve near Gotland.[47] The World Wide Fund for Nature (WWF) requested that countries party to the Baltic Marine Environment Protection Commission (HELCOM) safeguard the Baltic marine habitats, which could be altered by the implementation of the Nord Stream project.[48] Furthermore, Estonian scientist and former politician Endel Lippmaa raised concerns over the pipeline's planned path crossing zones of seismic activity in the Baltic Sea.[49], while in April 2007, the Young Conservative League of Lithuania started an online petition entitled "Protect the Baltic Sea while It’s Still not Too Late!", translated into all state languages of the countries of the Baltic region.[50]
Russian officials have described these concerns as far-fetched and politically motivated by opponents of the project. They argue that during the construction the seabed will be cleaned, rather than endangered. Russian Foreign Minister Sergey Lavrov has claimed that Russia fully respects the desire to provide for the 100% environmental sustainability of the project and that Russia is fully supportive of such an approach[51], and that all environmental concerns would be addressed in the process of environmental impact assessment. Also, Nord Stream has stated that there is no legal basis for an independent report on the impact on the environment, as demanded by several non-governmental organizations.[52]
Swedish environmental approval
On 21 December 2007, Nord Stream AG submitted application documents to the Swedish government for the pipeline construction in the Swedish Exclusive Economic Zone.[53]
On February 12 2008, the Swedish government rejected the consortium's application which it had found too incomplete to take a stance on. Sweden's environment secretary Andreas Carlgren said the consortium needs to describe the environmental consequences along the entire stretch of the proposed pipeline and put forward an alternative where the pipe is not built under the sea, and also describe the option where the gas pipeline is not built at all. The demands are likely to delay the project, which is already expected to exceed the initial budget of US$ 7.3 billion.[54][55]
German political scandal
The former Chancellor of Germany, Gerhard Schröder and the President of Russia, Vladimir Putin, were strong advocates of the pipeline project during the negotiation phase. The agreement to build the pipeline was signed two weeks before the German parliamentary election, without consulting nations such as Sweden and Finland whose coastal economic zones they intended build on. On 24 October 2005, just a few weeks before Schröder stepped down as a Chancellor, the German government guaranteed to cover €1 billion of the Nord Stream project cost, should Gazprom default on a loan. However, this guarantee expired at the end of 2006[56] without ever having been needed. Soon after leaving the post of Chancellor of Germany, Gerhard Schröder agreed to head the shareholders’ committee of Nord Stream AG. This has been widely described by German and international media as a scandalous conflict of interest[57][58][59], the accusation being that the pipeline project may have been pushed through for personal gain rather than for improving gas supplies to Germany. Information about the German government's guarantee was requested by the European Commission.[56]
International media have also alluded to a past relationship between the Managing Director of Nord Stream AG Matthias Warnig, a former East German secret police officer, who was friendly with Vladimir Putin when he was a KGB agent in East Germany.[60]
Land based alternative
Poland has proposed a land based alternative, named "Amber", via Estonia, Latvia, Lithuania and Poland—all EU and NATO member states—which would cost half as much as an underwater pipeline, would be shorter, and would have less environmental impacts.[61]
See also
- Gazprom
- Langeled pipeline - one of the longest sub-sea pipelines, connecting Norway with Great Britain
- Yamal-Europe pipeline
- Russia-Ukraine gas dispute of 2005
- Economy of Germany
- Economy of Russia
- South Stream
- Territorial disputes of the Russian Federation
References
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(help) - ^ a b "Status of the Nord Stream pipeline route in the Baltic Sea" (PDF). Nord Stream AG. October 2007. Retrieved 2007-12-16.
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(help) - ^ "Gaz de France and Gazprom Extend Their Natural Gas Supply Agreements until 2030". Oil Voice. 2006-12-19. Retrieved 2007-12-16.
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(help) - ^ "Gazprom Raises Estimated Cost of Nord Stream". Downstream Today. 2007-08-15. Retrieved 2007-08-26.
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(help) - ^ Natalia Grib, Oleg Gavrish (2007-07-02). "Nord Stream Requires New Influx". Kommersant. Retrieved 2007-08-26.
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(help) - ^ "Nord Stream eyes EIB cash". Upstream. 2007-02-07. Retrieved 2007-04-06.
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(help) - ^ "Nord Stream faces environmental hurdles". Upstream Online. 2007-04-10. Retrieved 2007-08-02.
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(help) - ^ Lucian Kim (2007-11-07). "Gazprom's Pipeline Plan `Unrealistic,' Finland Says". Bloomberg. Retrieved 2007-11-10.
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(help) - ^ "Watchdog OKs Nord Stream booster". Upstream Online. 2007-04-05. Retrieved 2007-08-02.
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(help) - ^ Fidelius Schmid, Wolfgang Proissl (2006-10-29). "US criticises Russia-Germany gas deal". Financial Times. Retrieved 2007-08-02.
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(help) - ^ Ariel Cohen (2006-10-26). "The North European Gas Pipeline Threatens Europe's Energy Security" (PDF). Heritage Foundation. Retrieved 2007-08-07.
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(help) - ^ "[[:Template:Sv icon]] Rysk gasledning säkerhetspolitiskt problem (Russian gas pipeline is a security problem)". Dagens Nyheter. 2006-11-14. Retrieved 2007-08-02.
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(help); URL–wikilink conflict (help) - ^ "Russian navy to ensure Nord Stream ecology—Putin". Interfax. 2006-10-25. Retrieved 2007-08-02.
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(help) - ^ "Gazprom seeking Shtokman partners". Upstream Online. 2007-07-28. Retrieved 2007-08-02.
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(help) - ^ Natalya Grib (2007-07-12). "Plus Gasification of Entire Europe". Kommersant. Retrieved 2007-08-26.
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(help) - ^ http://www.thedti.gov.za/econdb/commodpric32.html
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(help) - ^ "Tons of Mercury Found in the Baltic Sea. Europe's Underwater Chemical Dump". Spiegel International. 2006-08-30. Retrieved 2007-08-02.
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(help) - ^ "Nord Stream hits Swedish hurdle". Upstream Online. 2007-10-31. Retrieved 2007-11-10.
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(help) - ^ Terhi Kinnunen (2008-01-21). "Finland tells Nord Stream to study alternative routes". Reuters. Retrieved 2008-01-31.
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(help) - ^ Terhi Kinnunen (2008-01-15). "Finnish court actions could delay Baltic gas link". Reuters. Retrieved 2008-01-31.
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(help) - ^ Torsten Schäfer (2007-02-17). "Baltic Sea Gas Pipeline Meets European Resistance". Deutsche Welle. Retrieved 2007-08-02.
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(help) - ^ "Risk Assessment and an Environmental Impact Assessment for the North European Gas Pipeline Project (NEGP)" (PDF). HELCOM. 2005-10-03. Retrieved 2007-08-02.
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(help) - ^ Eesti Ekspress 20 September 2007: Akadeemik Lippmaa: gaasitoru täielik plahvatus võrduks 50 Hiroshimaga, interview with Endel Lippmaa conducted by Argo Ideon
- ^ Galina Raguzina (2007-06-01). "Nord Stream gas pipeline a danger for the Baltic ecology". Bellona. Retrieved 2007-11-10.
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(help) - ^ "Russia backs green Nord Stream". Upstream Online. 2007-06-13. Retrieved 2007-08-02.
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(help) - ^ "Nord Stream snubs independent review". Upstream Online. 2007-06-12. Retrieved 2007-08-02.
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(help) - ^ "Swedish Govt Receives Baltic Pipeline Plans". Downstream Today. 2007-12-21. Retrieved 2007-12-26.
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(help) - ^ Sweden says application for Baltic pipeline incomplete, Reuters, February 12, 2008.
- ^ Sweden unimpressed by Baltic pipeline proposal, The Local, February 12, 2008.
- ^ a b Tobias Buck, Bertrand Benoit (2006-05-08). "EU to probe German gas pipeline guarantee". Financial Times. Retrieved 2007-08-26.
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(help) - ^ Marc Young (2005-12-12). "Schröder to Build Putin's Pipeline". Spiegel Online International. Retrieved 2007-08-26.
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(help)
External links
- Nord Stream official website (English; Russian; German)
- Sweden and the NEGP: A Pilot Study of the North European Gas Pipeline and Sweden’s Dependence on Russian Energy, Base data report by Robert L. Larsson. June 2006
- Map of the disputed between Poland and Danmark zone (polish)
- Original letter from Poland about disputed area of the Baltic sea bottom
- Protect the Baltic Sea A petition demanding an independent environmental impact assessment of the Nord Stream gas pipeline project.