Banks consider 4 bln euros for Nabucco gas pipeline-UPDATE 1
Trade the News
Tuesday September 07, 2010 06:38:12 AM GMT
* Three international banks start due diligence for loans
* Loans to Nabucco could total 4 billion euros
* Move demonstrates EU political support for Nabucco - RWE
(Adds detail, quotes, background)
By Pete Harrison
BRUSSELS, Sept 6 (Reuters) - Plans for the giant Nabucco gas pipeline to bring Central Asian gas to Europe took a step forward on Monday, when the consortium announced the involvement of three international financial institutions.
The $10 billion project aims to help wean Europe off its dependency on Russian gas by transporting up to 31 billion cubic metres of gas a year from the Caspian region to an Austrian gas hub via Turkey and eastern Europe.
The Nabucco consortium said it had signed an agreement with the European Investment Bank (EIB), the European Bank for Reconstruction and Development and the World Bank's International Finance Corporation, whereby the three banks will start due diligence for loans that could reach 4 billion euros ($5.2 billion).
"We are at the beginning of the appraisal process -- it is not predetermined," EIB executive Thomas Barrett told reporters. "But the fact we are ready to identify a potential 4 billion euros can be taken as a very serious remark."
The European Commission, which also plans to grant up to 200 million euros to the project, welcomed the move and said the pipeline will help bolster Europe's energy security.
This year is seen as critical for Nabucco, which faces tough competition from Russia's planned South Stream pipeline via the Black Sea, and from two much cheaper European projects to import gas via Turkey -- the Trans-Adriatic Pipeline and ITGI.
Other challenges are continuing weak European gas demand due to the economic crisis, and increasing competition with China for Central Asian supplies.
POLITICAL SUPPORT
Nabucco shareholder RWE of Germany, said the agreement with the banks was proof of strong political support for the project.
"It is another clear signal to supplier countries that Nabucco has the full political support of Europe and the international community," said Stefan Judisch, chief executive of RWE Supply & Trading.
The final investment decision by Nabucco's backers will be made in the first quarter of next year, another shareholder Austria's OMV said recently.
Nabucco Managing Director Reinhard Mitschek said it might take longer for all the elements to fall into place.
Nabucco's gas transport contracts could be negotiated quickly once gas buyers and suppliers have completed their negotiations, he said. The banks are expected to make their decision sometime in 2011.
"I'm confident we'll close the whole financing package in Q3 or Q4," he told Reuters. "In 2012, we'd start construction and in 2015 the first gas would flow."
Nabucco's other shareholders include Hungary's MOL, Romania's Transgaz, Bulgaria's Bulgargaz, and Turkey's Botas. (Editing by James Jukwey)
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