Nord Stream AG, the OAO Gazprom (GAZP.RS)-led joint venture seeking to build an underwater pipeline from Russia to Germany, said Thursday it expects to complete EUR2.5 billion in financing for the second phase of the project in the fourth quarter of 2010.
Nord Stream AG, the OAO Gazprom (GAZP.RS)-led joint venture seeking to build an underwater pipeline from Russia to Germany , said Thursday it expects to complete EUR2.5 billion in financing for the second phase of the project in the fourth quarter of 2010.

The pipeline consortium will start negotiations with banks on the financing this summer, Chief Financial Officer Paul Corcoran said.

"We expect the phase two financing will be launched in the summer and signed by the end of the year," Corcoran said.

Friday, Russian President Dmitry Medvedev will officially launch construction of the pipeline, which is envisioned to carry 55 billion cubic meters of Russian natural gas on the bed of the Baltic Sea to European consumers, bypassing transit countries like Ukraine and Belarus .

Capital spending will total EUR7.4 billion, while total funding requirements until the pipeline start operating--including interest on loans--will be EUR8.8 billion, Corcoran said.

Seventy percent of capital spending will be provided via external funding, while the rest will be financed by Nord Stream AG's shareholders, which apart from Gazprom has Germany 's E.ON AG (EOAN.XE), Ruhrgas and BASF/Wintershall and Dutch Gasunie as minority shareholders.

"We have a very big interest from the banks," Corcoran said, adding that financing for phase one was 60% oversubscribed.

Earlier this year, Nord Stream AG raised EUR3.9 billion from 26 financial institutions and international banks for the first stage, which according to plan will start operations next year.

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