NSP2_Enhancing_EU_Gas_Market_2pg_Eng_20160413 (1)

NORD STREAM

NORD STREAM 2

CentralEuropeanGas Hub

Gaspool

bcm

Enhancing the EU natural gas market

The EU’s domestic gas production is in rapid decline. To meet demand, it needs reliable, affordable and sustainable new gas supplies as well as reliable infrastructure.

The Nord Stream 2 natural gas pipeline will transport gas from the world’s largest reserves in Russia to the EU internal market. With capacity to supply up to 26 million households, Nord Stream 2 will substantially enhance the EU’s long-term energy security and help maintain its industrial competitiveness.

Once gas lands in the EU in Germany, it can flow anywhere in the EU’s internal energy market via the different hubs. For example, it will flow from the German Gaspool hub to neighbouring hubs, such as in the Netherlands and Belgium, boosting available gas supplies there. It will also flow to the Austrian hub boosting liquidity and competitiveness in the southern, central and eastern EU.

European Union

Nord Stream pipeline in operation

Planned Nord Stream 2 pipeline

Indicative direction of onward transportation

Billion cubic metres

Virtual trading point

Supplying the EU’s internal energy market

10,200 km2 of land to build enough wind turbines for the same

energy output

39 nuclear power plants which require huge investment

to build and produce problematic radioactive waste

600 – 700 LNG tankers per year would put a higher burden on

the Baltic Sea

280 more oil shipments via tankers a year on

the Baltic and North Seas would be needed

Imports steady on 2010-2014 avg.

EU Import gap

Norway -24 bcm

EU Domestic Supply -82 bcm

462 500

20352010-2014 avg.

EU Demand grows by ~38bcm

160

97

205

7873

205

144

EU domestic gas production is set to fall 50% in the next 20 years, as ageing assets are retired and hard-to-reach gas in the North Sea becomes uneconomic, particularly at a time of low gas prices. The EU therefore needs to import more gas to meet its needs.

EU domestic gas production is rapidly declining

EU faces an import gap as demand outstrips supply

Source: IHS Energy Long-Term Supply and Demand Outlooks to 2040, July 2015

Nord Stream 2 will stimulate the development of onshore infrastructure to transport gas from the pipeline across Europe. This will include inter- country connections and reverse flows, which will help to bring the benefits of the internal market to more EU consumers.

Strengthening the EU’s transmission network

Complementing existing supply routes

Nord Stream already runs at 70-80% of its capacity – ready to handle the temporary demand peaks of today’s consumers. With a growing import gap, the EU needs to further strengthen and diversify its import capacities to meet future demand. Nord Stream 2 will supplement existing supply routes and, together with other new additions such as increased LNG shipments and the Southern Corridor, help to reduce the import gap.

Estimated equivalents of gas from Nord Stream 2

Proven reservesSource: BGR Energiestudie 2015

47,800bcm

RUSSIA

1,700 bcmEU

1,900bcm

NORWAY

47,800bcm

RUSSIA

1,700 bcmEU

1,900bcm

NORWAY

55 bcm natural gas

in terms of energy

production

A direct connection

Nord Stream 2 will provide a direct link between northern Russian gas reserves and European gas consumers, via the shortest possible route through the Baltic Sea. Nord Stream 2 will build on the success of the existing Nord Stream pipeline, continuing over 40 years of EU-Russian energy cooperation.

The EU must reduce its CO2 emissions 40% by 2030 from 1990 levels. Renewable energy holds great promise, but is not yet sufficiently scalable, reliable or affordable. Natural gas is therefore in demand, as a lower-carbon fossil fuel that is flexible for use in power, he-ating, transport and chemical feedstock. Electricity generation from gas-fired power plants pro-duces up to 50% less CO2 than coal-fired plants.

Lower carbon fuel

coal gas

Nord Stream 2 will be an international collaboration between six major energy companies – PJSC Gazprom, the German companies Uniper and

BASF SE/Wintershall Holding GmbH, the Anglo- Dutch Royal Dutch Shell plc, the Austrian OMV AG and the French Engie S.A. These companies have come together with one shared vision: to enhance European energy security by building a new pipeline through the Baltic Sea, which can transport gas from the world’s largest reserves in Russia directly to the EU internal energy market.

Nord Stream 2 builds on the success of the existing Nord Stream pipeline, an EU project of common interest that set a new benchmark for EU infrastructure projects in terms of safety, environmental protection, international collaboration, public consultation and efficient delivery. With demand for natural gas imports expected to rise in the coming years, Nord Stream 2 will supplement the existing Nord

Stream pipeline and other import routes, bringing additional capacity to supply up to 55 billion cubic meters of gas to boost EU internal gas market liquidity, hubs and interconnections. This is enough energy to supply 26 million households and deliver a secure and robust gas provision for Europe, long into the future.

The route of the Nord Stream 2 Pipeline provides the most direct connection between Russian gas reserves and consumer markets in the European Union. The pipeline stretches over 1,220 kilometres, entering the Baltic Sea on the Russian coast and reaching land near Greifswald, Germany. Nord Stream 2 will largely follow the route of the existing and proven Nord Stream system.

This route was chosen after years of research and is optimised for safety, environmental, social, economic and technical considerations. The pipeline corridor has been studied extensively since the early phases of the original Nord Stream project, which has been successfully implemented and demonstrates that a pipeline can be constructed and operated in harmony with the Baltic Sea, without negatively impacting the environment or neighbouring onshore communities. Once complete, the entire pipeline system will be tested thoroughly prior to commissioning and throughout its operation. The Nord Stream 2 Pipeline is designed to supply gas to European consumers for at least half a century, creating a major asset for European energy security.

The EU’s domestic gas production is in decline as reserves deplete, ageing assets are retired and hard-to-reach gas becomes increasingly uneconomic.

Domestic production is expected to halve in the next two decades, leaving an estimated import gap of 144 bcm by 2035. Without additional supply routes, Europe may face a shortfall of over a quarter (28%) of its annual gas requirement.

At the same time, demand is expected to grow. As the EU seeks to reduce its carbon emissions, many countries are looking to natural gas to help meet their energy targets. Natural gas is a lower-carbon fossil fuel than coal or oil, and is more reliable, flexible, scalable and affordable than renewables. It currently makes up almost a quarter of the EU’s energy consumption and is the only fossil fuel with projected growth in the EU energy mix.

Using gas to generate electricity produces about 50% fewer emissions per kilowatt-hour than using coal. Nonetheless, coal has seen a resurgence. As cheap shale gas has displaced coal in the USA, it is causing a surplus of cheap coal on the international market. US coal exports are projected to grow 50% by 2040. As a result, Europe needs a cost-effective gas supply to cover its import gap and compete against coal.

While LNG shipments can help reduce the import gap, they are not cost-competitive with coal.

With renewables not yet able to offer sufficient capacity, the EU needs to supplement its gas supply routes, so that European industry has more alternatives than high-emission coal or expensive LNG. Additional gas supply routes will help the EU meet import needs, provide a cost-effective and robust gas supply to consumers, and maintain industrial competitiveness without increasing carbon emissions.

Importing natural gas from Russia is a natural choice for the EU market. Russia is geographically closer than other potential sources, has a track record of stable supply and the world’s largest national gas reserves. Nord Stream 2 represents the continuation of a reciprocal relationship lasting over 40 years providing stable gas supplies for Europe and important income for Russia. Nord Stream 2 will provide additional supply capacity to meet increased EU demand, while Russian gas will continue to represent just a small portion (under 7%) of the EU’s diverse energy mix.

> Additional gas supply routes will help Europe meet demand and stay competitive amid declining domestic production. Nord Stream 2 will provide stable gas supplies for Europe.

> The fully privately funded Nord Stream 2 pipeline will en-hance European energy security at no additional cost to Euro-pean taxpayers. Six major energy companies are party to the shareholder agreement on Nord Stream 2, which will be imple-mented as a commercial initiative:

> Nord Stream 2 will build on the success of the existing Nord Stream pipeline and provide additional capacity to supply 55 bil-lion cubic meters of gas to the EU.

Transporting Natural Gas to the EU

The EU Needs Natural Gas

A Commercial Project

Gazprom (50%)

“Nord Stream 2 will double the throughput of our direct, state-of-the-art gas supply route via the Baltic Sea. It is important that those are mostly new gas volumes, which will be sought in Europe due to the continuing decline in domestic production. The fact that global energy majors participate in the project bespeaks its significance for securing reliable gas supply to European consumers.”

Alexey Miller, Chairman of the Gazprom Management Committee

OMV (10%)

“Nord Stream 2 is an additional transport route which is very much in the spirit of Europe.”Rainer Seele, Chairman of the Executive Board of OMV

Wintershall (10%)

“For more than 20 years, BASF has been participating in the construction of pipelines to ensure secure supplies of Russian gas to Europe. We want to bring our expertise to the expansion of Nord Stream.”Kurt Bock, Chairman of the Board of Executive Directors of BASF

Royal Dutch Shell (10%)

“New projects like Nord Stream 2 are needed to ensure that Europe’s demand for energy is met, especially as gas production in Europe itself is falling.”Ben van Beurden, Chief Executive Officer of Royal Dutch Shell

Uniper (10%)

“With the expansion of Nord Stream, we will further secure reliable natural gas supplies for Germany and the EU in the long-term, and strengthen our more than 40-year-lasting successful partnership with Gazprom.”Klaus Schäfer, CEO, Uniper

ENGIE (10%)

“As a key player in European natural gas, ENGIE has always supported new gas infrastructures, which enable diversification and better security of supply for the European market.”Pierre Chareyre, Executive Vice-President of ENGIE

Nord Stream 2A Natural Gas Pipeline for Europe

For further information, visit our website at: www.nord-stream2.com

For general enquiries please email [email protected] or contact our offices.

Nord Stream 2 AGGotthardstrasse 2

6300 Zug Switzerland

Contacts

NORD STREAM

NORD STREAM 2

CentralEuropeanGas Hub

Gaspool

Nord Stream 2 will provide an additional gas supply route into Europe that will supplement existing routes to meet gas demand and boost gas market

liquidity. The new pipeline will not only help to fill part of the EU’s import gap, it will also strengthen the EU internal market, bringing the benefits of a competitive gas market to more consumers across Europe.

Once gas from the pipeline lands in the EU, it can be transported anywhere in the EU internal market. It is anticipated that approximately one third of the additional gas landing in Germany will be transported via existing hubs onwards to northwestern Europe, and increase supply in this well-connected gas market. The remaining two thirds of the gas is expected to be transported to

central, eastern and southern Europe, contributing to the expansion of the Central European Gas Hub in Baumgarten, Austria. This will help to boost the markets for natural gas in this area to a comparable level of liquidity and competiveness as markets in northwestern Europe.

This increased gas supply will stimulate the construction of more interconnectors between countries and increase reverse flow capability, increasing liquidity in the entire system. Helping energy cross borders is one of the core targets in the European Commission’s action plan towards enabling unrestricted energy flow throughout the EU. It will strengthen the EU internal energy market and help more consumers across the whole of the EU to benefit from reliable, competitively-priced gas supplies.

Nord Stream 2 is committed to delivering a pipeline that meets the highest international standards for safety, environmental protection and technical

integrity. Our commitment will be overseen by international conventions, as well as authorities in Russia, Finland, Sweden, Denmark and Germany, and consultation with other relevant neighbouring countries.

Nord Stream 2 is undertaking comprehensive surveys, research and public consultations to understand and minimise any impact on the environment or on neighbouring communities. The national Environmental Impact Assessments (EIAs), together with the permitting process and the international consultation process governed by the Espoo Convention, aim to give all countries possibly affected by the pipeline the opportunity to review the project. This means not only those countries whose waters or exclusive economic zones the pipeline passes through, but also the neighbouring states Estonia, Latvia, Lithuania and Poland, who may be interested in its development. In due course, Nord Stream 2 will produce na-tional EIAs and the Espoo Report – in essence a transboundary EIA – outlining its coordinated approach to protecting the environment and providing the public and other stakeholders with the opportunity to respond. The EIAs will build on many years of research, field studies, surveys and monitoring programmes conducted by the original Nord Stream project, which constituted

one of the most significant analyses of the Bal-tic Sea ecosystem and the seabed along the pipeline route, greatly c ontributing to scientific understanding of this special ecosystem. Nord Stream 2’s own studies will further expand this body of knowledge.

All design, construction and operation activities will comply with established international standards and be subject to certification. Nord Stream 2 is working with experienced marine, offshore and engineering partners to benefit from their expertise and ensure that high safety standards are met. Nord Stream 2 will comply with the codes, standards and recommended practices of DNV GL, the independent certification body established to safeguard life, property and the environment. Since the pipeline opened in 2012, Nord Stream has received annual recognition from DNV GL for its safe and responsible practices. Nord Stream 2 intends to follow in these footsteps and meet the highest international standards.

Environmental protection is at the heart of Nord Stream 2’s activities. By increasing the amount of natural gas available to European markets,

the pipeline will decrease reliance on coal and oil, and help to reduce the EU’s greenhouse gas emissions. Natural gas is also an ideal supplement to renewable power, helping cover any inconsistencies in supply, as an idle gas- fired plant can become fully operational in just a few minutes, compared to several hours for a coal-fired power plant or even days for a nuclear reactor. Transporting gas via an underwater pipeline is more efficient than LNG transportation and reduces the need for additional tanker shipments, at a time when increasing ship traffic on the Baltic Sea is a concern for ecologists.

The new pipelines should not only deliver environmental benefits, but also avoid any environmental harm during construction and operation. Understanding, assessing and minimising possible risks associated with laying a gas pipeline across the Baltic seabed will be a top priority to protect personnel and the environment throughout the pipeline’s lifetime.

The Baltic Sea is a sensitive ecosystem that must be preserved with care. It is home to many unique animal and plant species, and provides a livelihood to many shoreline communities. HELCOM, the Baltic Marine Environment Protection Commission (or Helsinki Commission), lists five severe threats to the environment, including eutrophication, bottom trawling, overfishing, large oil spills and heavy metals. In contrast, pipelines are generally viewed as low-level threats because they lie inert on the seabed and have no negative long-term effects on the ecosystem.

Protecting the Baltic Sea environment has been – and remains – a top priority for the existing Nord Stream pipeline and this commitment has now been taken up by Nord Stream 2. Over six years of comprehensive environmental monitoring from the construction and operation of Nord Stream show no significant or lasting environmental impact from the pipeline. Nord Stream built a pipeline system that is in harmony with the Baltic Sea and Nord Stream 2 will be developed to the same high standards of environmental protection.

> Delivering gas to the EU single gas market: Nord Stream 2 will help fill part of the EU’s import gap, and at the same time strengthen the EU internal market. > As well as helping reduce the EU’s greenhouse gas emissions,

Nord Stream 2 will be built in harmony with the Baltic Sea, ensur-ing that its unique ecosystem is protected.

> Nord Stream 2 will meet the highest international standards throughout every phase of the project, following in the footsteps of the existing Nord Stream pipeline.

Protecting the Environment

A Connected Europe

Nord Stream 2 in Numbers

Meeting International Regulatory Standards

Russia has some 47,800 bcm of

natural gas reserves – the largest natural gas reserves in

the world.

47,800 bcm

Each pipe joint will be 12 metres long and weigh 24 tonnes with concrete coating.

12 m

24,000 kg

Nord Stream 2 will require around 200,000 coated steel pipes laid on the seabed.

200,000

600 – 700 LNG tankers per year would be required to transport the equivalent amount of gas as Nord Stream 2.

600 – 700

LNG

The pipeline system will run through the exclusive economic zones or territorial waters of five countries – Russia, Finland, Sweden, Denmark and Germany.

The EU is facing an import gap of 144 bcm of natural gas by 2035, owing to declining domestic production and increased gas demand.

144 bcmmissing in 2035 ?

Generating electricity from natural gas produces up to 50% less CO2 than from coal.

- 50 %CO2

The pipelines will be approximately 1,200 km long, and will run from the Russian coast through the Baltic Sea, reaching landfall in Germany.1,

200

km

The pipeline system is designed for an operating

life of at least 50 years.

50 years

The pipelines will have a constant internal diameter of 1,153 millimetres (48 inches) and a wall thickness of up to 41 millimetres.

1,153 mm41 mm

Nord Stream 2 will have capacity to transport 55 bcm of natural gas per year, enough to supply some 26 million European households.

26 m

illio

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