**Construction of the controversial Nord Stream pipeline from Russia to Europe under the Baltic Sea is being officially launched later.**Russian gas monopoly Gazprom said on Wednesday that the first pipe had been laid under the sea.
Gazprom holds 51% of Nord Stream, which will run from the Russian port of Vyborg to Germany’s Greifswald.
The project was given the go-ahead only in February amid fears that the pipeline could damage the Baltic Sea.
Russian President Dmitry Medvedev and high-profile officials from other participating countries and the European Union are expected to attend the official launching ceremony near Vyborg.
The pipeline will be passing through Russian, Finnish, Swedish and German waters.
Last month, Nord Stream secured a 3.9bn euro ($5.4bn; £3.5bn) fund to complete the first phase of the pipeline.
“Debt financing will cover 70% of the project costs while the remaining 30% will be provided by the project shareholders,” said Paul Corcoran, financial director of Nord Stream AG.
German companies BASF-Wintershall and E.On Ruhrgas each own 20% of Nord Stream, while Gasunie of the Netherlands holds 9%.
Alexey Bulgakov from Troika Dialog investment bank pointed out that “Gazprom and its partners seem to have managed to raise funds at rather low interest rates.”
The overall cost of the project, due for completion in 2012, is expected to reach 7.4bn euros.
Environmental worries
Russia hopes to pump up to 55bn cubic metres of gas a year to EU countries through the pipeline.
Supporters of the project say that it will secure gas supplies from Russia to Europe, which have been threatened or disrupted in the past due to political and financial disputes between Moscow and its neighbours.
But environmentalists argue that building the pipeline could lead to toxins lying on the sea bed being stirred up, as the Baltic sea is one of the most polluted in the world.
For a long time, Finland refused to give the green light to construct the pipeline, but finally agreed to it in February under the condition that ships laying the pipeline do not lay anchor in Finland’s economic zone.
The final hurdle was overcome after Russian Prime Minister Vladimir Putin assured Baltic leaders that the project was safe, as extensive research had been carried out into any environmental impact of the pipeline construction.
Alternative projects
Russia provides up to 30% of the gas consumed in Europe, and many European countries have been keen to secure alternative energy supplies.
The existing pipelines run from Russia to EU countries via Ukraine, Belarus and Moldova.
Apart from the Nord Stream, Russia has been planning another pipeline, the South Stream, which will run from southern Russia to Bulgaria under the Black Sea.
Meanwhile, Turkey, Romania, Bulgaria, Hungary and Austria last July signed an agreement to construct the long-planned 3,300km Nabucco natural gas pipeline.
It is expected to pump up to 31bn cubic metres of gas annually from the Caspian and the Middle East across Turkey and into Europe.
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