Nord Stream, Banks to Discuss Funding for Pipeline's Expansion to Germany

Nord Stream AG expects to start formal talks with banks “shortly” on borrowing 2.5 billion euros ($3.2 billion) for the expansion of a gas pipeline under the Baltic Sea to Germany, after delays this year.

The Nord Stream venture, led by Russia’s OAO Gazprom gas- export monopoly, is on track to agree on financing by year-end, spokesman Jens Mueller said in an e-mailed response to questions. So-called requests for proposal will be sent to interested banks shortly, he said, declining to give dates.

Nord Stream Finance Director Paul Corcoran said in April that the venture would start talks with banks in summer on financing the second link along the seabed to double capacity. The venture is building the first 27.5 billion-cubic-meter-a- year pipeline.

The request-for-proposal process for the second link initially was expected to start in early 2010, Mueller said in November 2009.

“It is usual for big projects like that,” Nord Stream spokesman Frank Dudley said by phone today. “There is no insecurity; it is just a big project.”

Nord Stream has “a strong shareholder structure,” as well as a gas transportation agreement with Gazprom which guarantees transit fees, Dudley said.

The completion of Phase 1 financing means that much of the due diligence has been done, Mueller said in the e-mail. Nord Stream raised 3.9 billion euros from 26 banks in March for the first phase, after planning to close the deal at the end of 2009. Banks pledged 60 percent more loans than the company sought.

There will “very clearly” be no delay on the second link, even after European fuel demand slumped, Corcoran said in April.

Gazprom owns 51 percent of Nord Stream, while Germany’s Wintershall Holding AG and E.ON Ruhrgas AG hold 15.5 percent each, and Nederlandse Gasunie NV and GDF Suez SA have 9 percent each.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at

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