Gazprom opens Nord Stream gas pipeline bypassing Ukraine

Yesterday Gazprom (RTS: GAZP RU, N/R) started pumping natural gas into the USD 10 bln Nord Stream subsea pipeline from Russia to Germany, Bloomberg reported yesterday. When fully operational next year, the pipeline will supply 26 mln European households. Currently Ukraine transports 80% of Russian gas to the EU. Gazprom said it could divert up to 20 bln cubic from Ukraine’s transit route, causing Naftogaz of Ukraine to lose around USD 600 mln in revenue from transit next year. The launching of the Nord Stream pipeline substantially lowers the leverage power of the Ukrainian government in attempts to renegotiate gas contracts with Gazprom.