Underwater footage shows huge hole in Nord Stream pipeline

The extent of the damage explosions caused to the Nord Stream 1 pipeline last month has been revealed by submersible drone footage.

The Baltic Sea blasts caused four leaks to the line, which carries gas from Russia to Europe. The video taken by Norwegian company Blueye Robotics showed the carnage, with both a huge tear and mangled metal clearly visible.

In total, 50 metres of pipe have been destroyed, some of it completely missing or the rest buried under the sea bed.

"It is only an extreme force that can bend metal that thick in the way we are seeing," Trond Larsen, a Blueye Robotics drone operator with the Norwegian company told Danish newspaper Expressen.

He said the explosions had made "a very large impact on the seabed around the pipe".

Although the decimated section of pipe is in international waters, two of the explosions fell in the Sweden economic zone and two in the Danish one.

Danish power and gas grid operator Energinet has expedited inspections of its own pipelines in light of the damage caused to Nord Stream 1 and 2, but on Tuesday said it has found no irregularities to date.

"Energinet has advanced routine inspections of Danish pipelines," head of gas transmission Peter Hodahl told Reuters.

The transmission system operator is also constantly monitoring pressure in the pipes to detect any errors, he added.

The review of all Danish pipelines, which is carried out by specialist vessels, is expected to be completed this week, with results known by the start of November.

"We have not observed anything abnormal at this stage," said a spokesperson.

Denmark is not alone in attempting to shore up its energy infrastructure. From Norwegian energy installations to German power lines, European states have raced to protect theirs after blaming the Nord Stream leaks on sabotage.

Dwindling flows of gas from Russia, which once supplied 40 per cent of Europe's needs, have left the EU struggling to unite over how to respond to surging prices that have deepened a cost-of-living crisis for families and businesses.

The European Commission was expected to propose on Tuesday that the EU design a "last resort measure" for a temporary "maximum dynamic price" on gas trades at the Title Transfer Facility Dutch gas hub, which serves as a benchmark price for European gas trading.

Other EU gas trading hubs would be linked to this price through a "dynamic price corridor", according to a draft document, which could change before publication. The measure would not launch immediately but would require a separate EU proposal and approval from EU countries to go ahead.

The EU package is unlikely to placate all 27 EU countries, whose leaders will discuss the proposals at a summit on October 20 to 21. Most EU countries have urged the Commission to propose a gas price cap, but disagree on its design.

Germany, the EU's economic powerhouse, and other wealthier states have opposed gas price caps, which they say could hamper gas purchases and discourage energy savings.

The draft document also said EU energy regulators would be charged with developing a new LNG price benchmark by the end of March, while Brussels would launch a "tool" for EU countries to start jointly buying gas.

LNG imports by ship to Europe have surged as governments have raced to find alternative gas supplies around the world, seeking to wean themselves off Russian deliveries.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”