Europe’s top banks keen on funding Nabucco

As global financial market recovers, Europe’s major commercial banks are getting more interested in financing the Nabucco gas pipeline project, which will pump Caspian and Central Asian gas to European markets. The consortium on the Nabucco gas pipeline project are holding talks with international financial institutions, including European Investment Bank and EBRD, to attract financing for construction of the 7.9-billion-euro pipeline. A final decision on investment is expected in mid-2011, with construction work due to begin by the end of next year.


> Nabucco Pipeline Map

The Nabucco pipeline, scheduled to be completed by 2014, is the key component of the EU's ambitious Southern Corridor plan. Nabucco is competing with Russia's South Stream pipeline project to meet gas demands in Europe. Nabucco shareholders are Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE with 16.67 percent each. About 30 percent of the 7.9 billion euro project’s cost will be covered by the Nabucco Gas Pipeline International’s shareholders, while 70 percent will be funded on account of international lenders. Turkmen gas The Nabucco shareholders and are holding negotiations independently and are interested to buy gas from the region. The consortium have promising statements from Turkmenistan and Iraq, as well as Azerbaijan, which expressed commitment to the gas project. "That shows that we are succeeding in turning the Nabucco into a multi-source project. We consider Azerbaijan as one of the first sources," Reinhard Mitschek, the managing director of the Nabucco Gas Pipeline International consortium, said in Baku last week. He said Europe is interested in importing gas from countries like Turkmenistan, Iraq, Azerbaijan and Egypt, and preliminary agreements have been reached with these countries, while Iran’s participation in the project is not a subject of discussion. Turkmenistan, the Central Asian state is expected to supply 10bn cubic meters of gas a year to European markets through Nabucco. "Currently, the possibility is being studied of laying the Trans-Caspian pipeline along the Caspian sea-bed. We expect 10bn cubic meters from Turkmenistan to Europe," Mitschek said. The idea of laying the Trans-Caspian pipeline, a sub-sea conduit linking Turkmenistan and Azerbaijan to deliver gas from Turkmenistan to Nabucco, was first announced 10 years ago. Viability According to Mitschek, gas resources of the Caspian region essentially suffice to fill the conduit. “If the regional countries try, two Nabucco pipelines can be filled with gas.” Mitschek said Nabucco shareholders will negotiate the gas fees with SOCAR, Azerbaijan’s state oil company, within Shakh Deniz project. SOCAR has 10 percent stake in this gas project.