Nabucco Pipeline May Get $5 Billion From EIB, EBRD, World Bank
Reinhard Mitschek, MD of Nabucco Gas Pipeline Consortium
Balint Porneczi/Bloomberg News
Reinhard Mitschek, managing director of the Nabucco Gas Pipeline Consortium.
Reinhard Mitschek, managing director of the Nabucco Gas Pipeline Consortium. Photographer: Balint Porneczi/Bloomberg News
The Nabucco gas pipeline venture delayed the start of construction even as the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank said they may lend the project as much as 4 billion euros ($5.2 billion).
“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 Vienna-based venture had previously said that construction was set to begin in late 2011, with shipments starting at the end of 2014 or early 2015.
The 7.9 billion-euro pipeline is designed to carry gas more than 3,300 kilometers (2,050 miles) from Turkey to Austria to reduce European dependence on Russia. The venture is counting on gas from the Caspian region and Iraq to fill the link.
“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.
Financing will be completed in the second half of 2011, Mitschek said.
“When you get so many parties, we’re talking about at least eight countries, we’re talking about 13 major companies, about x, y, z number of banks, bringing them all together to a common script, is something that can never be predicted on a timetable with precision,” said Thomas Barrett, a director at the European Investment Bank.
Institutional Financing
“The fact that one misses a precise calendar date when a project has a 50-year or 100-year life as the case may be, in the context of the project one cannot say one should be complacent, it just doesn’t matter to that degree,” Barrett said today in an interview with Bloomberg News in Brussels.
The EIB may contribute 2 billion euros, Nabucco said today in a statement on its website. The EBRD’s package is as much as 1.2 billion euros and the World Bank’s International Finance Corporation unit may pay about 800 million euros. Half of the EBRD and the IFC’s contributions would be syndicated to commercial banks.
The venture’s shareholders, which include Germany’s RWE AG and Vienna-based OMV AG, plan to provide 30 percent of the financing for pipeline themselves, with the rest from loans.
Financial Commitments
The venture will ask export credit agencies and international banks for the additional loans, Nabucco said today. “Commitments from potential lenders are expected to be sought in 2011,” Nabucco said in the statement.
The mandate letter signed today defines how the international financial institutions will appraise the project and the work needed before a final decision is made, as well as the potential level of financing, Nabucco said.
The European Union has pledged to give 200 million euros to the pipeline. The venture partners, which include Budapest- based Mol Nyrt., Bulgargaz EAD, Romania’s Transgaz SA Medias and Ankara-based Botas, will fund 30 percent of the cost, Nabucco has said.
OMV will finance its Nabucco investment via its “normal way of financing, out of the cash flow or out of bonds,” Werner Auli, who heads the company’s gas unit, said today in Brussels. While “it’s not a problem, it’s of course a lot of money.”
RWE, Mol, Botas
RWE hasn’t decided yet how to finance its stake, a press official, who declined to be identified in line with corporate policy, said today by phone. Mol expects a financial commitment from the shareholders next year, the Hungarian company’s press service said in an e-mailed response to questions.
Botas’ press department wasn’t immediately available to answer questions. Transgaz, Romania’s state-owned natural-gas distributor, will seek government loan guarantees to get funding to participate in the construction of the project, the company said in March.
The Bulgarian government of Boiko Borissov, which took office in July 2009, has not yet said how it is going to finance Nabucco and other energy projects in which it plans to participate. Bulgargaz is part of the Bulgarian Energy Holding, which was set up in 2006 by the previous Socialist government of Sergei Stanishev with a plan to sell shares and raise funds for the Nabucco and South Stream pipelines. The current government wants to dissolve the holding.
To contact the reporters on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net
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