Consortium Head: Europe’s major commercial banks interested in financing Nabucco

Consortium Head: Europe’s major commercial banks interested in financing Nabucco

Azerbaijan, Baku, June 24 / Trend, E.Ostapenko /

Partners on the European Nabucco pipeline, designed to diversify sources of gas supplies to the EU hold talks with international financial institutions to attract financing for construction of the pipeline worth 7.9 billion euros.

"We are negotiating with banks like European Investment Bank and EBRD. We started to negotiate with export credit agencies in April 2010," Reinhard Mitschek, managing director of the Nabucco Gas Pipeline said.

The final investment decision on the project will be adopted in late 2010, and consortium plans to complete all financial issues by mid-2011.

"Commercial banks are more actively involved  [in the negotiations on financing the Nabucco.] Financial market recovers, and major commercial banks in Europe are interested in financing the project. We plan to complete the financial issues in mid-2011, including agreements to allocate land, the structure of guarantee," Mitschek said.

First gas via Nabucco will be supplied in 2014. According to Mitschek, the Consortium has sent out invitations for pre-qualification for potential suppliers for pipelines, bents, compressors and other material needed for the construction of the pipeline that is scheduled for late 2011.

"We see enormous interest from the suppliers market to participate by material supply for the project. It means that project development is on schedule and now it's of course a very important topic - the gas supply," Mitschek stressed.

Azerbaijani and Turkmen gas

According to Mitschek,  the shareholders of Nabucco - OMV, RWE, Bulgargaz, Transgaz, Botas and RWE, which have equal shares in the project - 16.67 percent each, hold negotiations independently.

"They are interested to buy gas from the region. We have promising statements received from Turkmenistan and Iraq and also from Azerbaijan. That underlines that we are on a very good way with Nabucco to develop it as a multi-source project. We consider Azerbaijan as one of the first sources," Mitschek said noting that they expect gas from Azerbaijani project Shah Deniz-2, and other fields of the country.

It's necessary to lay Trans-Caspian pipeline on the bottom of the Caspian Sea to deliver gas from Turkmenistan to the Nabucco, idea of which was announced more than 10 years ago.

"At present, the possibility of the Trans-Caspian pipeline is being studied. We could expect 10 bln cubic meters from Turkmenistan to Europe," Mitschek noted.

He said Turkmen gas can be brought to Europe through Trans-Caspian gas pipeline. Then further one South Caucasus pipeline, which now serves for the Azerbaijani gas transport to Georgia and Turkey from the Shah Deniz field.

Project profitability

The head of the Nabucco believes that the project is technically and commercially competitive. "We plan to start working with 10-15 billion cubic meters of gas per year, we are optimistic to start with that quantity," Mitschek said. The total maximum capacity of Nabucco is 31 bln cubic meters of gas a year. "We know that this is an unrealistic amount for the beginning [of work of the pipe]," he noted.

Mitschek said share-holders of Nabucco will negotiate the gas fees with SOCAR within Shakh Deniz project. SOCAR has 10 per cent equity in this gas-condensate project.

"Definitely the next step is to negotiate the conclude gas deals. That is the basis for all the investments: for Shakh Deniz-2, for the extention of the South Caucasus pipeline, for the offshore pipeline from the Shakh Deniz-2 to the land line of Azerbaijan and also for Nabucco," he stressed.

Iran's participation in the project

At this stage, Nabucco doubts in the transportation of the Iranian gas via the pipeline to the European consumers. European oil and gas market participants have repeatedly stated that without a positive solution of the Iranian nuclear issue gas export from this country to the EU is hardly possible.

"Now, Iran's participation in the Nabucco project is not the topic of discussions. There are no offers from Iran. We have very close contact to Azerbaijan, Iraq and Turkmenistan. And European gas buyers will decide where to buy the gas. At the moment we receive the signals that European buyers want to buy gas here in Azerbaijan, Turkmenistan, Iraq, Egypt," Mitschek said.

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