Nabucco: Banks ready to flash the cash

It looks like major commercial banks in Europe are overcoming their skittishness following the global credit crunch. In fact, they may be ready to put their money where their mouths are when it comes to the Nabucco pipeline project, a crucial element of the EU’s Southern Corridor.

European Dialogue reports that chances for Nabucco, which would deliver natural gas from the Caspian region and Central Asia to European markets, to receive funds from European financial institutions may finally be improving. Members of the Nabucco Gas Pipeline International consortium report that they are indeed holding talks with international financial institutions to build Nabucco whose construction is scheduled to start at the end of 2011. Its completion date is set for 2014.

The Nabucco pipeline project is estimated to cost nearly USD 8 billion and involves numerous national gas companies, from Hungary’s MOL to Turkey’s Botas, all of whom are shareholders in the project. But according to the report, those enterprises are contributing the smaller portion of Nabucco’s construction costs.

About 30 percent of the 7.9 billion euro project’s cost will be covered by the Nabucco Gas Pipeline International’s shareholders, while 70 percent will be funded on account of international lenders.

Meanwhile, the Nabucco consortium is busy in negotiations with gas suppliers to pump through the pipeline, including Turkmenistan, Iraq and Azerbaijan, who is considered a “first source” according to Reinhard Mitschek, the managing director of the consortium. Mitschek says he’s confident that Nabucco’s capacity can be fulfilled through Caspian sources if the long-proposed Trans-Caspian pipeline comes to fruition.

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