Nord Stream Completes Phase I Financing

Source: 3/16/2010, Location: Asia

Nord Stream together with its shareholders in the consortium, Gazprom, BASF/Wintershall GmbH, E.ON Ruhrgas AG and N.V. Nederlandse Gasunie announced the successful signing of Phase I financing of the pipeline project. The financing for Phase I amounts to 3.9 billion euros and paves the way for construction of the first line of Nord Stream to start as scheduled in April 2010.

Financing for the project comes from Nord Stream’s shareholders who are providing investment totaling 30 percent of the total project cost pro rata to their holding in the company (Gazprom 51 percent, BASF/Wintershall GmbH, 20 percent, E.ON Ruhrgas AG 20 percent and N.V. Nederlandse Gasunie 9 percent) with 70 percent project financing from the bank market . Twenty-six banks are participating in the deal underlining the attractiveness of the project during difficult market conditions. The ECAs providing cover for the deal are HERMES and SACE with support also coming from Germany’s untied loan guarantee scheme: the amount covered by such agencies totals approximately 3.1 billion euros. Nord Stream will be approaching the financial markets for the financing of Phase II in 2010.

The positive response from lenders has meant that Nord Stream was approximately 60 percent oversubscribed for the 3.9 billion euros funding. Nord Stream has RBS, Commerzbank and Société Générale acting as financial advisers. Unicredit have a limited advisory role in connection to the untied loan programme of the German government. White & Case are acting as legal advisers to Nord Stream while Clifford Chance acts for the lenders. According to Matthias Warnig, Managing Director of Nord Stream: “It is clear from Phase I financing that investors see Nord Stream as an excellent investment opportunity. We sincerely thank them for their constructive support which brings us another step closer to realising this important project. The successful conclusion of the Phase I financing demonstrates that there is genuine enthusiasm for a project that will provide Europe with another major supply route for natural gas. With construction of the first pipeline to begin in April, Nord Stream is on track to deliver gas to Europe from 2011.”

Alexey Miller, Management Committee Chairman of Gazprom said: “The completion of Phase I financing is a landmark event in the development of Nord Stream and helps take the project from concept to reality. Nord Stream solidifies the long-standing energy relationship between Russia and Europe, a relationship that has lasted nearly forty years. Gazprom is delighted to be part of a venture that will provide reliable supplies of Russian energy to Europe for many decades to come.”

Dr. Bernhard Reutersberg, Chairman of E.ON Ruhrgas, stated: “The successful completion of Phase I financing demonstrates that E.ON Ruhrgas and the members of the Nord Stream consortium continue to be seen as reliable partners, especially in difficult economic times. By attracting 70 percent of the project’s costs through external financing, Nord Stream has demonstrated that it meets the high requirements of banks for stable commercial projects.”

According to Dr. Rainer Seele, Chairman of Wintershall/BASF: “Nord Stream is the best anti-freeze agent for Europe. It will secure substantial energy supply to Europe for a significant period of time. With its excellent CO2 values and its ability to be stored, gas is the only fossil fuel with a climate-friendly future and a natural partner of renewable energies with fluctuating production like wind and sun.”

Marcel Kramer, Chairman and CEO of Gasunie said: “Gasunie welcomes the completion of Phase I financing. Nord Stream is a vital additional route for the delivery of substantial quantities of natural gas. The project will enable consumers in many parts of Europe to continue to benefit from natural gas, the cleanest fossil fuel. Nord Stream really contributes to a sustainable future.”

The pipelaying of the first line of Nord Stream will start in April 2010 with the Castoro Sei pipelay vessel operating from this date. The Solitaire pipelay vessel will begin to lay pipe on the same line in September 2010. It is planned that construction of the first line will be completed in 2011 with construction on the second parallel line scheduled to begin in 2011 and finishing in 2012.

The twenty-six banks participating in the deal are:

1- Banco Bilbao Vizcaya Argentaria S.A. (BBVA)
2- The Bank of Tokyo-Mitsubishi UFJ, Ltd.
3- BayernLB, London Branch
4- BNP Paribas SA
5- Caja Madrid
6- Commerzbank AG
7- Crédit Agricole CIB
8- Credit Suisse AG
9- Deutsche Bank AG
10- Dexia Credit Local
11- DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main
12- Espirito Santo Investment
13- Fortis Bank Nederland
14- ING Bank N.V.
15- Intesa SanPaolo
16- KfW IPEX-Bank
17- Mediobanca
18- Natixis
19- Nordea Bank
20- Raiffeisen Zentralbank Oesterreich AG
21- The Royal Bank of Scotland
22- Société Générale
23- Standard Bank Plc
24- SMBC Europe Ltd.
25- UniCredit Group
26- WestLB AG

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