Financing for Nabucco to be settled once supply contracts achieved

Financing for Nabucco to be settled once supply contracts achieved

Azerbaijan, Baku, Nov. 24 /Trend A.Badalova/

Financing for Nabucco gas pipeline project, designed to transport gas from the Caspian region and Middle East, can be settled once supply contracts will be reached, Reuters reported referring to Nabucco Gas Pipeline International GmbH Managing Director Reinhard Mitschek.

"I am confident that once we will have the gas supply and transportation contracts and ... with political support we expect financing will be settled and will not create a bottleneck," Mitschek said at a news conference in Bucharest.

Nabucco project is planned to start construction in 2013 and the first supplies will be commissioned in 2017. The total length of the pipeline is 3900 kilometres with a maximum capacity of 31 billion cubic metres per year. The project's partners include the Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and the German RWE.

Mitschek said that the financial institutions such as European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and International Financial Corporation (IFC) were willing to contribute some 4 billion euros overall, pending several conditions, including an environmental assessment which would be finalized next year.

The EBRD, EIB, IFC - a member of the World Bank Group, the shareholders of Nabucco, and Nabucco Gas Pipeline International GmbH signed a mandate letter 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).

So far the estimated cost of Nabucco project is 7.9 billion euros.

Talking about the open season procedure, which involves putting on sale the capacity of the Nabucco pipeline, Mitschek said it will depend on progress with gas suppliers.

"I expect a decision from Shah Deniz at year-end and if this happens ... then we can start the open season at the end of the first quarter of 2012," Mitschek said.

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