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Medvedev Delivers Putin?€™s Brainchild

Medvedev signing a pipe on Friday. Dmitry Lovetsky

PORTOVAYA BAY, Leningrad Region — Prime Minister Vladimir Putin was nowhere in sight Friday when international leaders and businessmen arrived here for the start of construction on Nord Stream, an ambitious gas pipeline that many attribute to his years of tenacious lobbying.

Instead, President Dmitry Medvedev took center stage at the pipeline's starting point, some three hours by bus fr om St. Petersburg, wh ere a Gazprom-led consortium is building a facility that will generate pressure to push Russian gas beneath the Baltic Sea to Germany.

The prime minister's no-show had some participants at the ceremony scratching their heads. But analysts said Putin's decision to shun the event looked like a calculated move, building his political persona as a decision maker with no time for pomp and circumstance.

Medvedev spent about an hour at the gas compressor station to celebrate the laying of the first pipes off the Swedish coast, which actually had happened a day earlier, according to Nord Stream managers. The ceremony ended almost five years of tedious preparations and negotiations since Gazprom, E.On and BASF first signed a deal in September 2005 to build the new route.

Dutch energy company Gasunie has since joined the consortium, and France's GDF Suez is set to formally become another partner in the first half of May, a source familiar with the situation said Friday.

The 7.4 billion euro ($10 billion) project, designed to carry 55 billion cubic meters of gas, faced early skepticism in Europe over costs and mounting Russian influence on the continent's energy market.

But then-President Putin recruited a close ally, former German Chancellor Gerhard Schroeder, to lead the international consortium and to secure financing and support in Europe. Putin personally applied his immense political muscle to secure construction permits from Finland, Denmark and Sweden, whose territorial waters the project will cross.

Since becoming prime minister, Putin has continued his vigorous support for Nord Stream and for South Stream, a similar project that would pass under the Black Sea. Both pipelines were envisioned as ways to reduce transit risks as Russian gas flows to its biggest consumers in Western Europe.

“Putin has built a strong reputation as the father of the streams,” said Yevgeny Minchenko, director of the International Political Studies Institute, a think tank.

Some guests at the Friday ceremony, which brought together bankers, executives from partner companies and officials from the European countries involved, exchanged baffled comments about why Putin might have shied away.

Arriving by helicopter on a makeshift concrete helipad, Medvedev walked into white tents thrown up on the site to watch a short movie about the technology that Nord Stream will use. The area, a sand-blanketed clearing in a pine forest, was largely silent as cranes and bulldozers had suspended their work for the day.

In a speech afterward, Medvedev stressed the importance of the route for Europe's energy security, dropping hints about the unreliability of some transit countries, an apparent reference to Russia's trade disputes with Ukraine and Belarus in recent years, which have disrupted gas flows to Europe.

With Gazprom increasingly having to compete with lower-priced fuel on the European spot market, Medvedev made sure to note that Gazprom would offer “acceptable and reasonable” rates for the fuel from Nord Stream. The project's first line is scheduled to begin supplies in 2011.

The president also echoed Putin by taking a poke at the protracted environmental considerations by Sweden, Finland and Denmark, which delayed the start of construction by a year.

“Unprecedented preparatory work has been done,” he said. “Frankly speaking, it sometimes seemed to me that it would never end. But it did.”

Following a few more congratulatory speeches, including one by European Union Energy Commissioner Guenther Oettinger and a pre-recorded video message from German Chancellor Angela Merkel, a broadcast showed two workers in green overalls and snow-white gloves welding together two pipes outside the tent.

Medvedev, flanked by Gazprom chief Alexei Miller and Schroeder, walked to the pipes — one bearing the name Russia and the other Europe — and wrote “best of luck” with a white marker pen.

Putin chose to be in Novosibirsk on Thursday and Friday to hold a meeting on higher education and inspect how the cash-for-clunkers program was functioning in the regions.

Putin also appeared to drop a hint as to why he was skipping the long-delayed Nord Stream ceremony Thursday, when Mordovia's president, Nikolai Merkushkin, invited him to visit the republic this summer to cut a ribbon for new university buildings.

“There are other good people around to cut ribbons,” Putin replied.

While Putin may not have been referring to Medvedev, the phrase was a typical example of how the prime minister likes to show his supremacy, said Konstantin Simonov, director of the Foundation for National Energy Security, a think tank.

“'It's clear that you wouldn't have been able to manage this if it weren't for me, but it's all right to entrust at least something to you,'" Simonov said, suggesting this was Putin's thinking on skipping the pipeline opening.

“This way, he underlined his role in this project in a more elegant manner,” Simonov said. “This way of demonstrating his complete domination over others has a jesuit shade.”

Since becoming president in May 2008, Medvedev also has appeared at the grand openings of two other major gas projects that stem from Putin's time in the Kremlin: the start of production at the giant Yuzhno-Russkoye field and the launch of a liquefied natural gas plant in Sakhalin.

Russia and Austria are scheduled to sign an intergovernmental agreement on the construction of South Stream by the end of this month, Gazprom chief Miller told reporters on Friday. Austria is the final country that Gazprom has asked to join the project.

Miller also said the severe winter led to an increase in his company's output, prompting the world's largest gas producer to boost its 2010 production estimate to 529 billion cubic meters from 521 bcm, or by 1.5 percent.

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