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Nord Stream 2’s economic impact in the construction phase
A new report analysing the current status of project investment in Nord Stream 2 has concluded that the total economic benefit to the European Union (EU) represents €9.9bn for building the pipelines.
The second part of a recent report from Arthur D Little (ADL) – Nord Stream 2 economic impact in the construction phase – assesses the economic effects (job creation and GDP) of the ongoing project to build two new gas pipelines from Russia to Germany. The report, which is a follow-up to an earlier report created in 2017, analyses the current status of project investment and concludes that the total economic benefit to the European Union (EU) represents €9.9bn for building the pipelines. In comparison to the first report (2017), which was carried out in the procurement phase, more than twice as much capex has now been committed and spent in several EU and non-EU countries now that the project is in the middle of construction.
More than 1,000 contractors from all over Europe and Russia are contributing to the realisation of the project. This includes large international firms providing materials or construction services and small enterprises providing expert services. Furthermore, the investment until the end of December 2018 created 57,500 full-time job equivalents in the EU over five years, adding €4.7bn in GDP in various industrial sectors.
Nord Stream 2 is a major natural gas infrastructure project that aims to build a pipeline system with 55bn cm/y of transport capacity, exporting gas to the European market, where demand is stable but indigenous production is decreasing, creating an import gap.
The objective of the new Arthur D. Little study, commissioned by Nord Stream 2, is to understand the direct, indirect and induced effects of the project on the European economy, and on countries where actual investments in the pipeline have been or are being made in more detail. Compared to the previous report, the current one takes actual spent and detailed supplier data until the beginning of operations into account.
The most pronounced effects are seen in countries where major project-related construction activities are taking place – Russia, Germany, Finland, Denmark and Sweden; in countries traditionally associated with the offshore oil and gas industry that host the majority of service providers – the Netherlands, the UK, Norway and Italy; and at the headquarters of the project developer and other international service providers.
Michael Kruse, Partner in ADL’s Energy & Utilities Practice, says: ‘At a time when the oil and gas industry is experiencing cut-backs and lay-offs, this report transparently demonstrates the benefits of large energy infrastructure projects such as Nord Stream 2.’
The report can be downloaded at www.adl.com/NordStream2impact
