Int'l lenders consider loans for Nabucco gas pipeline

Three international financial institutions agreed on Monday to consider loans totaling 4 billion euros (5.1 billion U.S. dollars) for the Nabucco gas pipeline, a key project to reduce EU dependence on Russian gas.

The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the International Finance Corporation (IFC), as well as the Nabucco Gas Pipeline International GmbH and the shareholders of Nabucco, signed a mandate letter on Monday.

The letter formalized the conditions under which the three lenders would conduct their appraisal of the Nabucco project and decide whether to lend as much as four billion euros. The final decision was not expected until sometime next year.

Among the four billion euros, the EIB was expected to lend up to 2 billion euros (2.6 billion dollars) to the project, the EBRD up to 1.2 billion (1.5 billion dollars) and the IFC up to 800 million (1 billion dollars). The total cost of the Nabucco gas pipeline was estimated at 7.9 billion euros (10.1 billion dollars).

The European Commission, the EU's executive arm, welcomed the commitment by the three financial institutions.

"The letter reflects the strong commitment of major financial institutions for the Nabucco project and constitutes an important step towards its realization," it said in a statement.

The Commission would also provide a grant worth 200 million euros (260 million dollars) under the European Energy Program for Recovery (EEPR) for the first phase of construction.

The Nabucco pipeline is a proposed natural gas pipeline that would diversify natural gas suppliers and delivery routes for Europe. It would bring Central Asian gas to Europe via Turkey and reduce the EU's dependence on Russia.

The long-delayed pipeline is now expected to be operational by 2014 and will carry 31 billion cubic meters of natural gas per year.

Source: Xinhua