EBRD defines financing of Nabucco gas pipeline project

Oil&Gas Materials 4 July 2011 11:07 (UTC +04:00)

Azerbaijan , Baku, July 4 / Trend A.Badalova /

A final decision of the European Bank for Reconstruction and Development (EBRD) to finance the construction of the Nabucco gas pipeline will depend on the results of the project evaluation process, EBRD Press Advisor Sergey Gritsenko told Trend.

" Any final decision on the EBRD's financial participation will depend on the conclusion of a thorough due diligence process, taking into account social and environmental factors, as well as the commercial viability of the project and the approval of our shareholders ," Gritsenko said.

He did not state when the Nabucco project would be assessed.

The Nabucco project envisages supplying gas from the Caspian region and the Middle East to EU countries. The pipeline's maximum capacity will reach 31 billion cubic meters per year.

Participants of the project are Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE companies. Each of the participants has an equal share of 16.67 percent.

A mandate letter has been signed by the EBRD, the European Investment Bank (EIB), IFC - a member of the World Bank Group, the shareholders of Nabucco, and Nabucco Gas Pipeline International GmbH in September 2010. The signing marked the start of the appraisal process for the Nabucco project, a step required for a potential financing package of up to EUR 4 billion.

The potential financing package will consist of up to EUR 2 billion from the EIB, up to EUR 1.2 billion from the EBRD (up to EUR 600 million for EBRD's account and up to EUR 600 million to be syndicated to commercial banks) and up to around EUR 800 million from IFC (up to EUR 400 million for IFC's account and up to EUR 400 million to be syndicated to commercial banks).

Gritsenko said the EBRD believes that the Nabucco project could play a significant role in ensuring energy security in Europe and also supporting key economies in the EBRD region .

This potential role is not diminished by any change in the timetable, he said .

In early May, the Nabucco Gas Pipeline International GmbH announced the project's postponement, with construction moved to 2013 and first supplies to 2017.

Postponement is aimed to synchronize the project's realization with main natural gas suppliers' production activities.