Norway suspends Skanled gas pipeline project

oil-dockNordic and Eastern European nations hoping to break free of Russia’s dominant position in gas supply were dealt a blow when Norway suspended its USD 1.5 billion Skanled gas pipeline project. Skanled would have delivered gas from the North Sea directly to Norway, Denmark, Sweden, and perhaps even Poland, bypassing the Russians, who control the regional gas market.

Norway’s decision to halt work on the project is likely due to the growing risks associated with the world’s ongoing economic recession. The Kyiv Post says that Skanled was considered the last chance for Eastern Europe, which is currently dependent on Russia for gas, to secure a gas supply from Norway.

But Skanled has been having difficulty lining up enough new buyers in Scandinavia to make the project worth pursuing. “The Skanled partners decided today to suspend further project activities due to increased commercial risk combined with the global economic developments that have given an uncertain view on future gas demand,” Norway’s Gassco, the operator of North Sea gas pipelines, said in a statement.

Gassco added that the project could be restarted in the future if commercial conditions improve. The pipeline would be capable of pumping 6 billion cubic metres of gas each year from the North Sea hub of Kaarsto right to southern Norway and on the Sweden and Denmark; and possibly onward to Poland. But for now, much of Scandinavia will continue with cheaper gas supplies from Russia.