The Nord Stream consortium signed the Phase I financing of the pipeline project on March 16
th in London. The financing for Phase I accounts for € 3.9 billion. Another loan of € 2.5 billion for Phase II is expected to be obtained in late 2010. The rest of the money will be provided by consortium's shareholders.
The Nord Stream is a planned 1223 km natural gas offshore pipeline from Vyborg in Russia to Greifswald in Germany. The plan for the offshore pipeline is to build two parallel legs each with capacity of 27.5 billion cubic meters per year. Both legs are to be in service in November 2012. The first leg of the pipeline is to be built in 2010-2011 and money for it is stipulated by the contract signed in London.
Russia's Gazprom has 51 percent of Nord Stream shares, others are divided between partners from Germany and the Netherlands. French Gaz de France Suez is expected to join the shareholders by late March. Already 26 banks are involved in the project. The head of the Association of Russian Banks Garegin Tosunyan believes that multinational team will provide for project's financial stability
"It's a common phenomenon when large-scale projects are financed in a certain proportion - between the owners of the project and a wide range of creditors".
Co-lending is the best way to guarantee stable financing and at the same time diversify risks between the lenders. And what is even more important is that it offers companies to jointly control a project's implementation.
Guarantees to the bankers will be provided by the ending agencies, including the German Hermes and United Loan Guarantee Program, and the Italian SACE. The construction of the gas pipe is no longer hampered either by financial or administrative barriers. All technical and ecological permission have been obtained. Some politicians in Poland and in the Baltic states criticize the project for leaving them beyond the process of gas transportation and depriving of the status of gas transit counties. The Seim had already described the German-Russian Nord Stream project as ‘endangering Poland's security and independence'. Experts from the Baltic states claimed some ecological violations linked to the project but failed to provide any proof. The Nord Stream company spent over 100 million euro on environmental monitoring.
Twelve ships were found on the bottom of the Baltic Sea during the construction of the Nord Stream pipeline. They will remain there forever as landmarks of history, while the Nord Stream pipeline will symbolize a new era in Russia's energy cooperation with Europe.
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