Nabucco Takes A Step Forward
The Nabucco pipeline project consortium has signed an agreement with potential lenders to move forward with due diligence for financing totaling up to four billion Euros.
The mandate letter signed today with the European Investment Bank, European Bank for Reconstruction and Development and the International Finance Corporation, defines the terms of the lender's review process prior to a final decision being made.
However, the announcement by the Nabucco consortium also brought news of a delay in the project, which was initially was set to begin in late 2011.
“Construction will start 2012,” Nabucco Gas Pipeline International GmbH Managing Director Reinhard Mitschek said at a briefing today in Brussels. “The operation of the pipeline will start 2015.”
The financing plan envisions that the consortium’s shareholders RWE AG, OMV AG, Mol Nyrt, Bulgargaz EAD, Transgaz SA Medias and Botas, would provide 30 percent of the financing, with balance funded externally from loans. Additional funding will be sought from international export credit agencies and international banks
“Commitments from potential lenders are expected to be sought in 2011,” Nabucco said in the statement.
According to gas chief Werner Auli, OMV will finance its Nabucco investment via its “normal way of financing, out of the cash flow or out of bonds.” While “it's not a problem, it's of course a lot of money.” Other consortium partners have not disclosed plans as to how they plan to finance their proportionate share of the costs.
Financing will be completed in the second half of 2011, Mitschek said.
OMV recently stated that the final investment decision by Nabucco's backers will be made in the first quarter of next year at the very latest.
Filling the Pipeline
Nabucco still has not signed definite agreements for gas supply.
“We have to synchronize Nabucco first to the gas supply sources,” Mitschek said. Once the gas supply has been secured, the “open season” tender process for transporting gas will begin by the end of the year or in the first quarter of next year, he said.
Both Nabucco and its rival, the Russian led South Stream pipeline project are vying to secure supplies from Azerbaijan and its Shah Deniz fields.
Last week Russia and Azerbaijan signed an agreement will double gas present Azeri exports to Russia in 2011 to two billion cubic metres of gas, with a further increase set in 2012. Russia is positioning the agreement as evidence that South Stream has an upper hand over Nabucco.
Nabucco shareholder RWE recently entered into an agreement with the Kurdistan Regional Government to develop and design its domestic and export gas transportation infrastructure and to creating a route to market for Kurdistan's major gas reserves, however Baghdad is refusing to recognize the contract.