NORD STREAM 2 FUNDING

PLATTS - Russia's Gazprom and five European energy companies are committed to fully financing Russia's 55 Bcm/year Nord Stream 2 natural gas link to Germany if no external financing is raised, the project company's Chief Financial Officer Paul Corcoran said Friday.

As of September 2018, Gazprom provided over Eur2.6 billion ($3 billion) in equity and loans. The five European financial investors [Engie, OMV, Shell, Uniper and Wintershall] matched this with over Eur2.6 billion of their own loans," Corcoran told S&P Global Platts in an interview.

This Eur5.2 billion already committed is around 55% of the estimated Eur9.5 billion ($11 billion) total cost, including financing.

A US law adopted last year gave the US president discretionary powers to impose sanctions on companies investing in Russian energy export pipelines, such as Nord Stream 2, from August 2, 2017, creating uncertainty about the project's attractiveness to new investors.

The Nord Stream 2 project company had intended to go to the market for external financing for up to 70% of the total cost this year, in a bid to optimize financing as much as possible.

It now plans to do so "probably in the first half of 2019," Corcoran said.

The commitment by Engie, OMV, Shell, Uniper and Wintershall to pay for up to half of the total cost is not affected by the US law, as the financing agreement was signed in April 2017, before the law applied, he said.

Gazprom has committed to fund the other 50%, "so we are funded [with or without new investors]," Corcoran said. 

Nord Stream 2 would face some extra costs if it has to change its route through the Danish waters of the Baltic Sea to get planning approval, but these would be "manageable and limited," Corcoran said.

The company has applied for permits for both an "optimal" route, which under a recent change in Danish law would include an assessment by Denmark's foreign affairs ministry, and an alternative, which would not.

It already has planning permits from the four other countries along the route -- Finland, Germany, Russia and Sweden -- and started laying pipes in Finland earlier this month.

Corcoran said even if the Danish permit is not granted until the middle of next year, for either route, the project could still be completed by end-2019 as originally planned.

"We have planned the pipe lay accordingly and the Danish section will be installed in in the second half of 2019. Construction of the Danish section is expected to take around two months," he said.

Gazprom wants to have Nord Stream 2 flowing gas before its transit agreement with Ukraine expires at the end of 2019.

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Earlier:

2018, September, 17, 15:05:00 NORD STREAM 2 FOR EUROPE PLATTS - Moscow also hopes to have its 55 Bcm/year Nord Stream 2 pipeline and its 31.5 Bcm/year TurkStream link ready to flow gas to Europe by the end of 2019, leaving only limited volumes for transit via Ukraine.

2018, June, 27, 10:55:00 U.S. - NORD STREAM SANCTIONS OGJ - Sandra Oudkirk, deputy assistant secretary for energy diplomacy at the US Department of State, confirmed that the Trump administration has received several requests to sanction the proposed Gazprom-sponsored pipeline that would extend from Russia beneath the Baltic Sea to Germany.

2017, April, 25, 18:40:00 NORD STREAM - 2 INVESTMENT Nord Stream 2 AG signed financing agreements for the Nord Stream 2 pipeline project with ENGIE, OMV, Shell, Uniper and Wintershall.

2016, June, 20, 18:10:00 UKRAINE NEED MONEY Shipping 110bn m³/yr would cost Gazprom a quarter of the amount it would spend if it used Nord Stream, while booking capacity for 70bn m³/yr would still cost it only a third as much.

2016, March, 29, 18:50:00 NORD STREAM: THE PERFECT OPPORTUNITY It says that two thirds of the gas will flow towards the Central European Gas Hub in Baumgarten, Austria. “This hub offers ideal connectivity and can handle large flows to central, east, southeast and south European countries, boosting their gas markets to comparable levels of liquidity and competiveness as in northwest Europe.”

2015, December, 21, 19:55:00 NORD STREAM II: PRAGMATIC SOLUTION Gazprom and some utilities say Nord Stream-2 is the most pragmatic solution to shoring up Europe's energy security. The European Commission has said it is assessing its legality.

2015, November, 5, 19:50:00 POLAND VS NORD STREAM Referring to the Nord Stream projects I & II, former Deputy Prime Minister of Poland Janusz Steinhoff said: “From the point of view of domestic diversification and policy, these projects are extremely irrational, because these are examples of bypassing various regulations to liberalize the gas markets which are in place in the European Union. In other words, Nord Stream I & II are not subject to regulation that gas pipelines running through the EU are, and this is an evident example of an irrational approach and a lack of solidarity in Europe.”