The Nabucco consortium is set to announce Monday that top international lenders will sign an agreement to take a senior financing role for its planned EUR7.9 billion natural gas pipeline, several people familiar with the matter said Thursday.
The Nabucco consortium is set to announce Monday that top international
lenders will sign an agreement to take a senior financing role for its planned
EUR7.9 billion natural gas pipeline, several people familiar with the matter
said Thursday.
At a ceremony and press conference scheduled to take place Monday morning in
Brussels, the Nabucco consortium will say the lenders will sign a mandate
agreement that will kick off a due diligence process, expected to culminate in
"significant" financing for the project at the end of 2011, the
people told Dow Jones Newswires.
The lenders include the European Bank for Reconstruction and Development, the
European Investment Bank and possibly the World Bank's International Finance
Corporation, they said.
A spokesman for the Nabucco consortium, whose pipeline is slated to transport
gas from the Caspian and Middle Eastern regions to central
Europe
through
Turkey
,
declined to comment on the information but confirmed financing issues will be
addressed at the press conference in
Brussels
Monday.
The consortium has wrestled for years with the problem of how to find reliable
gas supplies for the project to ensure the project's long-term commercial
viability.
The consortium consists of
Austria
's OMV
AG (OMV.VI),
Germany
's RWE
AG (RWE.XE),
Turkey
's
Botas
,
Bulgaria
's
Bulgarian Energy Holding,
Romania
's
Transgaz and
Hungary
's MOL
Nyrt. (MOL.BU).
The most likely first gas supplier for Nabucco would be an off-shore
Azerbaijani field in the Caspian basin, but competition for that gas is high
and it would offer less than 10 billion cubic meters a year. Another potential
gas source is
Iraq
, but
procedural, political and technical hurdles suggest that gas will also not be
available quickly.
The exact amount of financing the lenders will contribute remains unclear, but
a person familiar with the matter said they would provide a "large
part" of the required capital, while another said the lenders would take a
"senior financing role."
The Nabucco consortium has said it intends to build the 3,300-kilometer
pipeline with around 30% of equity capital and 70% debt.
The EBRD had indicated in June 2009 that it could lead a group of lenders to
finance the project in the amount of EUR1 billion, but major development banks
have subsequently been silent on potential financing contributions.
In October 2009, Nabucco said it had started discussion with EBRD and EIB over
financing of the project and soon afterwards also launched negotiations with
IFC. A month later, Transgaz officials said that EBRD and EIB could lend up to
EUR1.5 billion of an overall debt capital requirement of EUR5.6 billion.
The Nabucco pipeline is expected to deliver around 31 billion cubic meters of
gas annually from the Caspian region and
Iraq
to
central
Europe
through
Turkey
,
Bulgaria
,
Romania
and
Hungary
,
bypassing
Russia
.
The Nabucco pipeline has been backed by the European Union as it is considered
crucial to diversify the block's heavy dependence on Russian gas.
Russia
accounts for around 25% of the EU's annual gas supplies.
Russia
, the
world's biggest energy supplier, wants to build its own routes to bypass
ex-Soviet transit country
Ukraine
after
rows in recent years over prices. Its South Stream project is scheduled to
start by the end of 2015.
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