The Realization of Nord Stream: An Interview with Paul Corcoran

On November 8, 2010, the heads of government and other political and business leaders gathered today at Lubmin on Germany’s Baltic Sea coast for a ceremony to commemorate the first flow of gas through the Nord Stream Pipeline.

Gazprom holds a 51 percent stake in the joint venture, with 
German companies BASF SE/Wintershall Holding GmbH and E.ON Ruhrgas AG hold
ing 15.5 percent each, and the Dutch gas infrastructure company N.V. Nederlandse Gasunie and the French energy company GDF SUEZ S.A. each hold a 9 percent stake.

Paul Corcoran is Financial Director of Nord Stream AG, the international joint venture established for the planning, construction and subsequent operation of the new offshore gas pipeline.

Mr. Corcoran, who has been nominated for the 2012 European Gas Conference Awards as Executive of the Year, provided Natural Gas Europe with an exclusive interview regarding the project.

What was the major challenge the Nord Stream faced in construsting and preparing for the operation of the pipeline project?

The main challenge was the coordination for the cooperation of the nine Baltic countries involved in the project, a process that required a lot of attention and dedication,  especially regarding the environmental and technical features of Nord Stream.

It has to be noted that 450 meetings, 16 international consultations and 25 public hearings where organized by Nord Stream communications to support gaining national permits for construction of the pipeline.

Lastly, it has to be said that, five countries granted the necessary national permits for the construction after four years of an extremely challenging compliance & permitting process.

It must have been difficult and complex to manage a project which involved a multitude of actors, both state and non-state?

Absolutely, that was a major challenge for us and that includes the cooperation with the countries and the law permits involved, as well as, the EU that required several high-level criteria for the project. In addition we had to keep up with the standards that the banks financing required the project to commit to.

Furthermore, special attention was provided in the environmental aspects of the project that included an in-depth survey of 40,000 km of the Baltic Sea and th einvestment of 140 million euros into environmental studies, planning, route design and monitoring paid of – 1,000 sample locations along the pipeline route showed no unexpected environmental effects.

Regarding Nord Stream’s finances, where do you think the current success of the project lies in its ability to secure the substantial amounts of capital it required?

Indeed there was a critical success for the project that managed to attract over 6.4 billion Euros from over thirty banking institutions at a period where the world is experiencing the worst finance crisis since the Great Depression.  In general the project is seen as a solid investment for banks involved.

It could be said that attracting a large volume of external project financing with a 16 year tenor for the covered tranches, Nord Stream has demonstrated that, in a very difficult market, the project met the high requirements of banks for strategic and strong credit projects. This has been widely acknowledged as a remarkable result.

How do you view cooperation between Nord Stream's shareholders and the EU?

I think that the EU views Nord Stream as a strategic project, which has attained a Trans-European Network (TEN) status,  Nord Stream already plays a key role in the diversification of energy supply, provides energy security for the EU and it is a key contribution for the whole of the EU. Since the beginning of the project we had a lot of support from the EU and especially the energy commission with Commissioner Piebalgs and Gunther Oettinger the current EU Energy Commissioner.

How do you envisage the project a generation from now?

Nord Stream will pump gas into the European market for 50 years and will play a crucial role for the European energy security, as the North Sea production decreases and in parallel the consumption of natural gas in the European markets increases. The first Nord Stream pipeline is operational since November 2011; the second pipeline will be operational by end of 2012. Nord Stream contributes to the EU’s energy security and to meeting its climate change goals. It is a major infrastructure project, realized on time within budget that will guarantee safe and reliable gas transportation for the upcoming 50 years.

Is Nord Stream to be considered as a crucial step towards securing European energy needs on par with the EU's 2050 energy visions?

Nord Stream is a crucial step to further introduce the use of natural gas into Europe which is a bridge energy source before the mass use of renewable sources can take place and reduce significantly the CO2 emissions in Europe. In that sense, the project plays an important role and complies with the 2050 strategy.

Lastly, what is the main technical feature or aspect of Nord Stream's construction that really went beyond the ordinary?

It is a combination of several factors. First of all, although there are other similar projects, Nord Stream is the only one currently that has achieved to be the one which is the longest, has the highest entry pressure and the widest diameter. Outstanding technical design allowed construction of a pipe more than 1,200 km long beyond the Baltic Sea – the longest offshore pipeline so far.

It was possible to reduce the wall thickness of the pipes in two steps as gas pressure drops during transport of gas from Russia to Europe – therefore, the amount of steel could be reduced significant and a faster pipe laying process was possible. Furthermore, the outstanding technical design allows operation of the pipeline without intermediate compressor station.

In 2011, hard work of the recent years paid off - the realization of the Nord Stream project is successful and various challenges have been and are being mastered. No other pipeline project up to date contains the combination of all such technical features, thus making Nord Stream as the best of its kind nowadays.

We are very proud that we managed to deliver such a project on time and with no additional costs and also for the contribution that it has for the European energy security.

Learn more about Nord Stream HERE   The European Gas Conference and Awards are being held 24-27 January 2012 in Vienna