Secure gas supply for Europe – Major gas infrastructure project well underway >

Nord Stream Project Presentation – Nordic Council, March 2011

Energy infrastructure for Europe > Nord Stream > Two parallel offshore pipelines of 1,224 km (transport capacity 55 bcm per year) > A direct and fixed link between Russia’s vast proven gas reserves and the European Union > An additional route complementing existing network and other planned pipelines > Infrastructure project ‘of European interest’ within the framework of the EU’s TEN-E guidelines Gas transported by Nord Stream can > Provide 26 million European households with electricity and heating fuel > Make a substantial contribution to EU climate protection goals > Reach consumers already in late 2011

2

Nord Stream AG – a strong European-Russian consortium >

51%

15.5%

15.5%

9%

9%

Supervisory Level Shareholders Committee

Management Level Managing Director Technical Director

Project Director

Financial Director

Communications Director

3

Project history >

1997-1999 Birth of project and company, FinnishRussian consortium North Transgaz

2006 Nord Stream AG officially founded (Zug, Switzerland)

2008 N.V. Nederlandse Gasunie joins the project

2010 GDF SUEZ joins the project 150 employees from 19 nations

4

Meeting the growing need for natural gas imports in the EU > The EU will need 159-198 bcm of additional gas imports by 2030 630 bcm 55

536 bcm

143

320

Import gap Σ 198 bcm

Growing EU import needs 320

216

Decreasing European production

2030

2008 Domestic production

Source: IEA, World Energy Outlook, November 2010

112

Existing imports

Additional import requirements

Nord Stream

5

The growing importance of natural gas > > Natural gas is very efficient and produces much lower CO2 emissions than other fossil fuels when combusted

EU energy mix (2009)

> Natural gas is becoming the most important fossil fuel in the EU energy mix by 2030, surpassing oil > Secure supply of 55 bcm of natural gas a year will be needed to help the EU to meet its CO2 targets > Natural gas acts as a bridge to greater use of renewable energy sources as it is flexible in use in combination with renewables (mainly for electricity production) coal nuclear

Source: IEA, World Energy Outlook, November 2010

oil renewables

natural gas

6

Additional pipeline transport capacities needed > Pipelines put in operation since 2008 Skanled (suspended)

Pipelines under construction

Nord Stream (55 bcm/a)

Planned pipelines Baltic Pipe (5 bcm/a)

White Stream (32 bcm/a)

Galsi Medgaz

Trans Adriatic Pipeline (10 bcm/a)

South Stream (63 bcm/a)

(8 bcm/a)

(8 bcm/a)

Transmed (+ 7 bcm/a) Source: European Commission, Priority Interconnection Plan 2007; Nord Stream

ITGI / IGI Poseidon (8-10 bcm/a)

Turkey-GreeceInterconnector Nabucco (11-12 bcm/a)

(31 bcm/a)

7

N ST ORD RE AM

Nord Stream’s onshore connections to the European network – OPAL & NEL > Lubmin bei Greifswald Hamburg

Bacton

Bunde

INTERCONNECTOR

Schwerin

Bremen

NEL

G RH

Rehden Amsterdam

Berlin

Hanover Magdeburg

Lippe London

MID

WEDAL Zeebrugge

Aachen

AL

Duesseldorf Brussels

Cologne

STEGAL

Erfurt

ER M

MEGAL North Nuremberg

Stuttgart

Frankfurt/Oder

Leipzig Dresden

Olbernhau

TR

AN SG AS Prague

MEGAL South Passau

P TEN

YAMAL

Rueckersdorf

L DA I M

Ludwigshafen

Source: WINGAS

Mallnow

AL JAG

Reckrod

Frankfurt/Main

Transit pipelines Pipelines under construction

OPAL

Rysum

BBL

Haiming Munich

WAG

8

Nord Stream – Ensuring energy security

Vast proven Russian gas reserves >

9,160 44,380

13,890 4,470

29,610 8,060

14,760

46,570 16,240

Total reserves: 187,490 Sources: BP-Statistical Review of World Energy 2010; Proven reserves are those quantities that can be recovered from known reservoirs under existing economic and operating conditions with reasonable certainty (BP)

10

Mutual dependency between the EU and Russia > EU gas supply 506 bcm (2009)

26% imports from Russia 37% imports from other countries

131 bcm of gas

37% domestic production

Gazprom earnings from gas sales 45 billion euros (2009)

€

56% Sales to Europe*

€

25 bn euros*

44% Domestic sales and other exports

* including Turkey, Serbia, Croatia and Switzerland, excluding the Baltic States. Sources: Gazprom, 2010; EUROSTAT; All data for 2009

11

Project players – a true European endeavour > Nord Stream & Shareholders 1 2 3

Nord Stream AG OAO Gazprom GDF SUEZ S.A.

BASF SE/Wintershall Holding GmbH E.ON Ruhrgas AG 6 N.V. Nederlandse Gasunie 4 5

Sweden

Nord Stream Gas Purchasers Gazprom Marketing and Trading Ltd, UK 2 DONG Energy A/S

3 4 5

1

GDF SUEZ S. A. WINGAS GmbH & Co. KG E.ON Ruhrgas AG

EUPEC Port of Sassnitz-Mukran Port of Kotka

Port of Hanko Port of Slite Port of Karlskrona

1

EUROPIPE OMK Sumitomo** 4 PetrolValves 1 2 3

Operations*

5 6 7 8 9

Technip Statoil Siemens 13 IMPaC 10 11 12

Saipem Allseas Van Oord Boskalis-Tideway Rohde Nielsen

2 3

Marin Mätteknik Rambøll DoF

4 5 6

PeterGaz ERM DNV

7 8

6

7

2

Denmark

1

8

5

7

3

4

2

Russia

2 4

5

2

Germany

1 10

France 6

12 1 Switzerland 5 4

Environmental Studies, Quality Management & Safety* 1

9

13

6

5

2

Netherlands

1

Pipes & Materials* Construction*

4

6

3

Logistics 4 5 6

3

11

UK 1 2 3

Finland

Norway

Italy

FOGA SGS TÜV

* Selection of contractors **Sumitomo is headquartered in Tokyo, Japan

12

The decision making process of the Nord Stream Project – Environmental Impact Assessments and Espoo Process >

Tora Leifland Holmström Nordic Council Meeting, 31.03.2011

A complex permitting process in five countries > The Nord Stream route crosses five Exclusive Economic Zones and territorial waters of three countries Country

Exclusive Economic Zones (EEZ) Proposed pipeline route Territorial waters (TW) Pipeline of the European Gas Network

Espoo Party of Origin

EEZ [km]

TW [km]

Total [km]

Russia

1

122

123

Finland

375

0

375

Sweden

506

0

506

Denmark

50

88

138

Germany

32

50

82

Total

1,224

Espoo Affected Party

14

A project by the book – relevant legal framework > National law (5 countries involved)

Supranational

International law (9 countries involved)

• EIA Directive (excl. RUS) • Construction and operation

• European directives, regulations • TEN-E guideline

• UNCLOS (Art. 79 Freedom to lay pipelines if compliant with environmental regulations) • Espoo Convention • Helsinki Convention

15

Relevant national legal framework > Country

Legislation in EEZ/Territorial Waters (TW) Permits issued • Federal laws about Internal Sea Water, Territorial Sea, Continental Shelf; Decree of the government

Construction permit (18 Dec 2009)

• Finnish Act on the EEZ

EEZ permit (5 Nov 2009) Water permit (12 Feb 2010)

• Water Act • Continental Shelf Act

Construction permit (5 Nov 2009)

• Continental Shelf Act

Construction permit (20 Oct 2009)

• Energy Industry Act

Construction permit TW (21 Dec 2009) Construction permit EEZ (28 Dec 2009) Permit for re-routing (26 Feb and 19 Aug 2010)

• Federal Mining Act

16

International consultations for three years – all Baltic Sea States involved >

Espoo Party of Origin

Espoo Affected Party

EEZ

Territorial waters

pipeline route

European gas network

17

International consultations – Nine Baltic Sea states involved > Parties of Origin: Affected Parties:

16 Espoo consultation meetings and more than 20 public hearings held

2006

2008

2007 19 April

November

Notification of Affected Parties by Parties of Origin

Application of Espoo Convention by Parties of Origin

February November

Route Statement Document submitted for public review

First public participation period

2009

November

March

June

Submission of the Espoo Report to national authorities in the Baltic Sea states

S-route Statement Document submitted for public review

16 June

Final Espoo consultation meeting – Closure of Espoo Process

Second public participation period

18

All required national permits received >

2009 30 June 02 Oct. Water Permit received

2010 20 Oct. 05 Nov. 18 Dec. 21/28 Dec. 12 Feb. 26 Feb./19 Aug.

Construction Permit granted

Munitions clearance Permit obtained

EEZ Permits granted

Construction Permit granted

Water Permit granted

First and second Construction Permit granted

Re-routing in German waters approved 19

Espoo informal consultation meetings > Date

Location

Participants

19 April 2006

Hamburg, Germany

Parties of Origin

20 April 2006

Hamburg, Germany

Parties of Origin and Affected Parties

9 May 2006

Hamburg, Germany

Parties of Origin

28-29 August 2006

St. Petersburg, Russia

Parties of Origin

17 October 2007

Hamburg, Germany

Parties of Origin

7 November 2006

Copenhagen, Denmark

Parties of Origin and Affected Parties

6 February 2007

Helsinki, Finland

Parties of Origin and Affected Parties

20 March 2007

Stockholm, Sweden

Parties of Origin

7-8 June 2007

Hamburg, Germany

Parties of Origin plus Estonia

21-22 August 2007

Berlin, Germany

Parties of Origin and Affected Parties

9 October 2007

Bornholm, Denmark

Parties of Origin and Affected Parties

6-7 February 2008

Hamburg, Germany

Parties of Origin and Affected Parties

29-30 May 2008

Moscow, Russia

Parties of Origin and Affected Parties

16-17 September 2009

Hamburg, Germany

Experts designated of the Parties of Origin and Affected Parties

17-18 September 2008

Hamburg, Germany

Parties of Origin and Affected Parties

15-16 December 2008

Zurich, Switzerland

Parties of Origin and Affected Parties

23 January 2009

Berlin, Germany

Parties of Origin

13 February 2009

Copenhagen, Denmark

Parties of Origin and Affected Parties

15 June 2009

Stralsund, Germany

Parties of Origin and Affected Parties

Public hearings after project notification > Country

Location

Date

Helsinki

14 November 2006 & 11 December 2006

Turku

14 December 2006

Hanko

12 December 2006

Kotka

13 December 2006

Denmark

Bornholm

11 January 2007

Sweden

Visby (Gotland)

30 November 2006 & 22 January 2007

Stockholm

29 November 2006

Russia

Vyborg

23 November 2007

Estonia

Tallinn

18 December 2006

Germany

Stralsund

30 January 2007

Finland

Public hearings on the Nord Stream Espoo Report > Country

Location

Date

Helsinki

10 March 2009

Turku

11 March 2009

Hanko

12 March 2009

Mariehamn

16 March 2009

Kotka

17 March 2009

Denmark

Rønne (Bornholm)

21 April 2009

Sweden

Visby (Gotland)

22 April 2009

Lithuania

Vilnius

22 April 2009

Klaipeda

23 April 2009

Russia

Vyborg

28 April 2009

Estonia

Tallinn

29 April 2009

Latvia

Riga

6 May 2009

Germany

Stralsund

22 June 2009 to 3 July 2009

Finland

Transboundary Environmental Report – Espoo Report > > The Espoo Report is a result of an extensive detailed scientific analysis of the Baltic Sea and describes the potential environmental impact of the project along the whole pipeline route > On explicit request of the ‘Parties of Origin’, “eco regions” were introduced in the Espoo Report − Concept of “eco regions” in contrast to national boundaries − Concept introduced at a late stage in the process

> Basis for the countries concerned to fulfil their obligations under the Espoo Convention > Available for Public Participation from 9 March to 8 June 2009 in all nine countries around the Baltic Sea − Procedures synchronised – Espoo consultation in nine countries and national consultation periods conducted in the same timeframe 23

Espoo Report – main challenges > > Management of expectations of nine countries with different national standards and requirements > Lack of common basis and understanding for the assessment of documents > Final Espoo Report a compromise with the consequence that no country received 100% of what was requested but lots of information individually deemed unnecessary

24

Espoo Report – structure > Binder 1:

Binder 2:

Binder 3:

Binder 4:

Summary Documents

Main Espoo Report Chapters 1-8

Main Espoo Report Chapters 9-13

Map Atlas

> Non-Technical Summary (NTS) of the Espoo Report

> Introduction

> Impact assessment and mitigation measures

> Key issue papers

> Consultation process

> Natura 2000

> Project description

> Transboundary impacts

> Description of the general physical, chemical and biological environment of the Baltic Sea surrounding the pipelines

− − − − − −

Natura 2000 Seabed intervention Munitions Fish and fisheries Maritime safety Cultural heritage

> Project justification and history

> Risk assessment > Alternative analysis

> Summaries of national EIA‘s − − − − −

Russia Finland Sweden Denmark Germany

> Impact assessment methodology > Baseline environment

> Environmental management and monitoring

− − − − − −

Route Alternatives Protected areas Munitions Water quality Sediments

> Gaps and uncertainties

25

Espoo Report – facts and figures > >

Espoo Report written in English and translated into nine languages of the Baltic Sea countries

>

On average, Espoo Report consists of 2,585.5 pages − Longest version: Russian (2,769 pages) − Shortest version: Estonian (2,477 pages)

>

935 Espoo Reports printed − 2.8 million pages − 10,000 kg of paper

>

2,073 DVDs produced

26

Unique Espoo consultations > > Espoo Convention required the five ‘Parties of Origin’ to consider whether the project could potentially affect themselves and four other countries (‘Affected Parties’) − From the perspective of each of the five ‘Parties of Origin’, there could be up to eight other countries’ potential impacts to consider − Normally each country informs its neighbour with an individual document on potential transboundary impacts − Nord Stream submitted one single document (Espoo Report) for all countries involved in favour of transparency and participation of the general public

> The Baltic Sea has a very strong momentum of identification − Baltic Sea as a common ecological, economic and cultural region − Identification with the Baltic Sea goes beyond national boundaries

> No company has ever conducted such comprehensive environmental studies of the Baltic Sea − Some 40,000 line kilometres surveyed and 100 million euros invested − Studies will be an important basis for further research of the Baltic Sea environment

27

Limits and boundaries of the Espoo process > > No project in the Baltic Sea region has ever initiated and maintained such comprehensive cross-border environmental consultations − Nine Baltic Sea countries involved − Russia committed to follow the Espoo Convention in the case of the Nord Stream project − National processes and habits vary significantly from country to country − No common general standards and rules for the interpretation and application of regulations and laws such as EU regulations or the Espoo Convention − Entire process led to enormous costs and effort for the developer to convey such a wide variety of regulations and conventions − For smaller projects such efforts and especially the costs are prohibitive

28

Environmental Protection > Environmental monitoring programme established

Samira Andersson, Nord Stream AG Nordic Counsil, March 2011 29

Committed to preserving the environment > Nord Stream: > Invested 100 million euros into environmental studies, planning and route design > Devoted 40 million euros to a comprehensive environmental monitoring programme > Surveyed 40,000 line kilometres of the Baltic Sea in comprehensive geophysical investigations > Concluded comprehensive EIAs and environmental studies > Successfully cleared over 100 munitions for safe routing > Preserved cultural heritage and identified 100 wrecks in the pipeline corridor > Will share the findings with scientists and others working on preserving and improving the Baltic Sea 30

Committed to Preserving the Environment > Nord Stream: > CONCLUDED comprehensive EIA and environmental studies that found: • Environmental impacts are temporary and of minor significance • Fishing can be impacted during construction, but fish stock are not affected > IDENTIFIED the optimal route, minimising impact on the Baltic Sea environment

31

Numerous surveys ensure safe routing > Nord Stream surveys > Conducted over four years > Covering 40,000 line kilometres > Total investment of 140 million euros in surveys and environmental monitoring > Using state-of-the-art equipment – Multibeam echo sounder and side-scan sonar, providing pictures of the seabed – Magnetometers, detecting metal objects – Remotely operated vehicle (ROV) for video inspection – Gradiometers for precise information on the location of detected objects

32

Safest route with least environmental impact based on stringent criteria > Environmental criteria >

Minimise pipeline length

>

Avoid environmentally sensitive areas and Natura 2000 sites

Socio-economic criteria > >

Minimise restrictions on marine users such as fishing and shipping Avoid munitions, cultural heritage sites and planned and existing infrastructure

Technical criteria > Control construction time > Optimise free spans and curves Various route alternatives presented Final route agreed with authorities Proposed route

Nord Stream final route

33

Protecting and preserving Natura 2000 areas >

34

Assessment of offshore route alternatives >

35

Objectives of Environmental Monitoring > > To verify that the pipeline is installed and operated in accordance with permit conditions > To verify that the pipeline construction does not cause impacts that were not anticipated or impacts that are greater than anticipated > To verify the findings of the national EIAs > To monitor the recovery of the environment after construction > To control and monitor that significant environmental disturbances will not be caused > To provide the basis for corrective action if necessary 36

Subject

Russia

Finland

Sweden

Denmark

Germany

Physical and chemical environment Water quality

+

+

+

+

+

Seabed sediment

+

+

+

+

+

Hydrography and seabed topography

+

+

-

+

-

Soil

+

-

-

-

-

Landscape and topography

+

-

-

-

+

Air quality

+

-

-

-

-

Noise

+

+

-

-

+

Fish

+

-

+

+

+

Birds

+

-

-

-

+

Marine mammals

+

-

-

-

+

Benthic flora and fauna

+

+

+

+

+

Terrestrial flora and fauna

+

-

-

-

+

Fisheries

-

+

+

-

-

Cultural heritage

+

+

+

+

+

Conventional munitions

+

+

+

-

+

Chemical munitions

-

-

-

+

-

Biological environment

Socioeconomic environment

Monitoring and clearance of munitions

+: Monitored at selected/relevant locations. -: Not monitored.

Potential impacts on fish and fish stocks > Potential impacts on fish and fish stocks can be the result of: > Sediment dispersion and sedimentation during construction − High concentrations of suspended material can injure adult and juvenile fish − Bottom-laid eggs can be damaged > Noise and physical disturbance during construction − Noises from shipping, trenching by ploughing and pile-driving are within the hearing frequency range of most fish species > Occupation of the seabed and changes in bathymetry during operation − The pipeline structure, including the pipelines and rocks berms, will result in the establishment of new habitats and fauna communities 38

Respecting fish and fishery > Fish population > Pipe-laying activities in the cod and herring spawning areas are avoided in the spawning season between January and May > During operation, the pipeline could actually attract fish populations as it acts as an artificial reef

Commercial fishery > Pipeline only affects bottom trawling – Bottom trawling unproblematic in areas where the pipeline lies flat on the seabed or is embedded in it – New trawl boards enable trawling over freespans and other obstacles > Nord Stream compensates additional effort > Agreements in place with fishery organisations around the Baltic Sea

No lasting negative effect on fish stocks and commercial fishery 39

Fish monitoring per country > Germany

Denmark

Sweden

Finland

Russia

Evaluates the recovery process of near-shore shallow waters as nursery habitat for juvenile fish

The monitoring of fish along the pipeline to investigate whether the pipelines lead to a so-called “reef effect” is carried out

Evaluate possible impacts on fish species inside the two Natura 2000 areas and the so-called “reef effect”

There is no monitoring of fish in Finland. This is due to the fact that the fish community in the Finnish sector mainly comprises pelagic fish, whereas impacts will be related to the nearseabed environment

Fish monitoring stations measuring the condition of ichthyoplankton (juvenile fish), fish monitoring with gill nets and fish monitoring with bottom trawls will be performed

40

Dialog with fishermen around the Baltic Sea > Fishermen from the very beginning core target group of the project > First meetings with fishermen in 2007 > Education of potential impact of the pipeline on fish and fisheries > Develop common solution – bottom trawling possible with new trawl boards which enable trawling over free spans and other obstacles > Agreement with fishery organisations in all Baltic Sea countries about compensation for additional fishing efforts > FOGA newsletter for fishermen which informs about construction progress and potential restriction zones

41

Munitions identified along the route > > 3,000 objects of different nature detected > 2,000 objects visually analysed > Over 100 munitions successfully cleared: – 49 in the Finnish EEZ – 7 in the Swedish EEZ – 49 in Russian waters – 2 explosive items in German waters > Five chemical munitions found, will be left on the seabed, pose no risk to the pipeline and the environment > Analysis of 100 additional soil samples show no chemical contamination of the seabed

42

Safe handling of munitions > Planning

Execution

> Schedule

> Observations

– Perform works during ice-free period – Avoid important fish spawning periods – Avoid marine mammal and bird migration routes and times > Technology – Select fish and mammal monitoring and dispersal systems > Procedure

– Professional Marine Mammal Observers provide technical expertise – Passive acoustic monitoring – Acoustic deterrents – pingers and small charges > Disposal – 3,000 objects detected, 2,000 visually analysed

– Environmental management programme, clearance plans

– Only small amount of conventional munitions had to be cleared – around 100 in total

– Cooperation with BACTEC Int.Ltd., an experienced explosive ordnance disposal company

– Five chemical munitions found on the entire route – Will be left on the seabed as they pose no risk to the pipeline and environment

43

Safeguarding cultural heritage >

44

Identified cultural heritage sites > > Pipeline passes close to several shipwreck sites and areas of submerged landscapes > A historic rudder from the 17th or 18th century, found near the island of Bornholm, was salvaged

> Six wrecks or possible wrecks have been found within 50 metres of the pipeline > An additional 13 wrecks have been identified within the anchor corridor

> Twelve shipwrecks have been discovered in the anchor corridor, most of them were commercial ships from the 18th and 19th century > It is possible that remains of settlements and seasonal hunting stations can be found near Gotland and Öland 45

Identified cultural heritage sites > > In the Bay of Greifswald, pipeline traverses the historical ship-wreck barrier of 20 sunken ships, one of which has been salvaged > Remnants of a smaller cargo vessel have been documented and relocated > Another wreck from the late Middle Ages/early modern era carrying a cargo of 65 copper plates has been identified

> A total of 17 wrecks, some of which are made of wood and some of metal, have been identified in the anchor corridor >Two admiralty anchors from the 18th to 19th centuries have been salvaged

46

Data and Information Fund – Nord Stream shares knowledge of Baltic Sea studies >

47

Committed to preserving the environment > Nord Stream: > Invested 100 million euros into environmental studies, planning and route design > Devoted 40 million euros to a comprehensive environmental monitoring programme > Surveyed 40,000 line kilometres of the Baltic Sea in comprehensive geophysical investigations > Concluded comprehensive EIAs and environmental studies > Successfully cleared over 100 munitions for safe routing > Preserved cultural heritage and identified 100 wrecks in the pipeline corridor > Will share the findings with scientists and others working on preserving and improving the Baltic Sea 48

Thank you! >