Nord Stream Completes Financing with $3.5 Billion Bank Loans
Nord Stream AG raised 2.5 billion euros ($3.5 billion) from 24 banks, completing financing for construction of the OAO Gazprom-led natural-gas pipeline from Russia to Germany under the Baltic Sea.
Nord Stream will use the funding to start second-phase construction in May, the Zug, Switzerland-based venture said in a statement today. Work on the first line of the gas link will be completed in April, Nord Stream said.
Gazprom, Russia’s gas export monopoly, and its partners, BASF SE (BAS)’s Wintershall AG unit, E.ON Ruhrgas AG, Nederlandse Gasunie NV, and GDF Suez SA, plan to ship gas directly to Europe, bypassing transit countries such as Ukraine. Nord Stream’s first line will start delivering gas to European consumers in early October, Managing Director Matthias Warnig told reporters today in Berlin.
“The finance for the total project is absolutely in place,” Finance Director Paul Corcoran said in a phone interview from Berlin. “Our project is on track, on plan, within timetable and within budget.”
A total of 24 banks, including Barclays Bank Plc, BNP Paribas (BNP), ING Groep NV (INGA), Credit Suisse AG and Natixis (KN) took part in the financing, Nord Stream said. The commercial tranche is for 750 million euros, Corcoran said. The other 1.75 billion euros are covered by Euler Hermes SA (ELE), the world’s largest trade-credit insurer, Italy’s SACE SpA export credit agency and Germany’s UFK government loan guarantee program, he said.
Libya Unrest
The shareholders will provide 1 billion euros more, as they fund 30 percent of the total costs, Corcoran said.
The venture raised 3.9 billion euros from 26 banks in March of last year for the first of the two planned parallel links.
The second line will be completed in April 2012 and will start deliveries in November 2012, doubling total deliveries to 55 billion cubic meters. That’s about 70 percent of what Germany consumed in 2009, according to BP Plc. All of the transport capacity has been sold, Corcoran said in the interview.
Unrest in North Africa “underlines how important it is to have different supply routes,” Corcoran said. Gazprom said Feb. 28 that it has increased shipments 60 percent to Italy to replace supply lost when a pipeline from Libya to Sicily was shut last week.
Gazprom owns 51 percent of Nord Stream, while Wintershall and E.ON Ruhrgas hold 15.5 percent each, and Gasunie and GDF Suez (GSZ) have 9 percent each.
Warnig said he is “very happy” with the shareholder structure and there is no sign that anyone wants to pull out.
The shareholders will start receiving dividend “quite early following the start of the operations,” provided there is excess cash after paying obligations to the banks, Corcoran said in the interview.
To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net Brian Parkin in Berlin at bparkin@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
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