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Russian, German firms win pipe tender for Nord Stream

German and Russian manufacturers will supply the pipes for the first stage of the trans-Baltic project to bring Russian natural gas to Europe, the project operator said Tuesday.

The Nord Stream joint venture said in a news release the international tender to supply high-quality steel pipes for the first pipeline was awarded to Europipe, the world’s largest pipe producer, and Russia’s OMK. The project operator, with Russian energy giant Gazprom owning a 51% stake and Germany’s BASF and E.ON. holding 24.5% each, said the decision was taken at a shareholders’ committee Monday following a thorough evaluation of bids from qualified German, Japanese and Russian companies. “All bidders had to prove their technical ability to supply high pressure large-diameter steel pipes for offshore use,” the company said.

Nord Stream said both Europipe and OMK could provide the necessary capacities for manufacture and delivery of the required pipes in 2008 and 2009. Both suppliers are Det Norske Veritas (DNV) certified suppliers, guaranteeing the highest international standards. The news release said this was a highly significant decision regarding the requirements for the project and also the overall budget as one pipeline is made from around 1.1 million metric tons of steel. “By committing itself to two-year contracts, which are expected to be signed in October, Nord Stream secures the pipes for the first line at the current price level,” Nord Stream said. “At the same time, the expected development of the steel market was taken into account to also provide for security on the contractors’ side.”

Three quarters of the tender will be awarded to Europipe and one quarter to OMK. Basis for the split are technical, commercial and capacity-related criteria. For the second pipeline, there will be a completely new tender, with the number of technically qualified pipe mills participating expected to rise. The ambitious Nord Stream pipeline project is estimated at around $12 billion and is scheduled to be completed in 2012. The first of two parallel pipelines, approximately 1,200 kilometers (750 miles) long, each with a transport capacity of some 27.5 billion cubic meters per annum, is to become operational in 2010. In the second phase, capacity should double to about 55 billion cubic meters a year.

Gas imports to the European Union, 336 billion cubic meters in 2005, are projected to grow by 200 billion cubic meters to 536 per year by 2015. Connecting the world’s biggest gas reserves with the European gas pipeline network, Nord Stream will meet about 25% of that additional requirement. The project will be an important contribution to long-term security of supplies and a test of energy partnerships between the European Union and Russia. (