The Baltic Sea gas pipeline project, Nord Stream, is on track to deliver its first gas in the fourth quarter of 2011 as promised, a senior executive told a gas conference on Tuesday
The Baltic Sea gas pipeline project, Nord Stream, is on track to deliver its first gas in the fourth quarter of 2011 as promised, a senior executive told a gas conference on Tuesday.
"We're absolutely on track to deliver the project on time and we are in budget," financial director Paul Corcoran said.
His comments came as a relief to those supporting the 7.4 billion euros ($9.34 billion) project, which Russian Prime Minister Vladimir Putin said last week could be scrapped if Europe continues to delay the project.
Putin's view was echoed on Tuesday by Gazprom's Deputy Chief Executive Alexander Medvedev, who said Russia could opt for tanker exports of liquefied gas if Europe dragged its feet on pipeline projects.
The European Union has identified the plan to pump 55 billion cubic metres of Russian gas annually to Europe via Germany -- involving Russia's Gazprom, Germany's E.ON and BASF and Dutch Gasunie -- as a key project to ensure secure gas supplies for Europe.
But EU lawmakers have called for a new investigation into the Nord Stream's environmental impact.
Corcoran dismissed fears the global financial crisis could dent the project's feasibility.
"It is true that liquidity isn't there, as it was two years ago," he said, adding that 30 percent of Nord Stream's financing will come from shareholders' equity and the remainder of 70 percent from the project finance market.
"What we hear is... although banks are closed for many types of business, the (global) project finance market is still open and this is exactly the type of project the bank is happy to see," he said.
He explained that Nord Stream aims to receive all financing for the first phase of the pipeline by July 2009, and obtain the second and final phase's financing a year later.
"We are looking at 3.5 billion euros as the first phase of financing," he said, adding that Nord Stream is in talks with commerical banks over attracting funds.
When asked whether Western or Russian banks were engaged in talks with Nord Stream, Corcoran declined to specify.
The environmental impact assessment is expected to be ready at the beginning of 2009. "After that, documents will be ready and we can begin the discussion in detail with the lending institution."
"Project shareholders have already paid 1.3 billion euros from equity into the company to finance the project," he added.
"It is energy, it's long-term infrastructure, stable returns... In that sense, we can be sure the project will make good progress also financially."