Brussels, 06/09/2010 (Agence Europe) - In Brussels on Monday 6 September, three international financial institutions - the EIB, the EBRD and the International Finance Corporation (IFC), the World Bank's private sector division, signed a mandate letter, marking the start of the appraisal process of the Nabucco project, which will carry gas from Central Asia and the Middle East without passing through Russia. This is a required step towards a potential financing package of up to €4 billion. The mandate letter formalises the conditions under which the three IFIs will conduct their appraisal of the Nabucco project, and provides an indication of the potential level of financing. Final approval of the project will be dependent on assessment of commercial, social and environmental aspects. The EIB could potentially provide up to €2 billion, the EBRD up to €1.2 billion and the IFC up to €800 million for this pan-European project, the total cost of which is estimated at €7.9 billion. Export credit agencies and international banks are expected to begin their appraisal of the Nabucco project soon after the international financial institutions. Commitments from potential lenders are expected to be sought in 2011.
At this point, no gas sales contracts have been signed to feed into the Nabucco gas pipeline, the annual capacity of which will be 31 billion cubic metres, but the partners in the consortium - ÖMV of Austria, MOL of Hungary, Transgaz of Romania, Bulgargaz of Bulgaria, Botas of Turkey and RWE of Germany, each of which hold a 16.67% share - are negotiating gas contracts with Azerbaijan and Iraq. Work on the pipeline is expected to begin at the start of 2012, with 2015 the completion date. The EIB, EBRD and IFC advance financing agreement is an important step towards realisation of the project, after the intergovernmental agreement of summer 2009 between Austria, Bulgaria, Hungary, Romania and Turkey, which provided an international legal framework for the legal and regulatory arrangements for the export and transport of gas through the pipeline which will link Austria and Turkey (see EUROPE 9941 and 9942). (E.H./transl.rt)