European Bank for Reconstruction and Development to Step Up for Nabucco

BUDAPEST (Reuters) — The European Bank for Reconstruction and Development has (EBRD) provided a 200 million euro ($277.2 million) loan to Hungarian MOL to finance a gas storage facility and is ready to throw “substantial” financing behind the Nabucco gas pipeline.

A top EBRD official also told Reuters on Wednesday the EBRD wanted to boost available gas reserves in Hungary, which joined in supplying Bosnia, Serbia and Croatia with natural gas in January during the Ukraine gas transit crisis.

The eight-year loan to MOL will be used to complete the conversion of the Szoreg 1 reservoir into an underground storage facility with 1.2 billion cubic metres devoted to a strategic reserves and 700 million cubic metres to commercial storage.

EBRD Energy Business Group Director Riccardo Puliti also said in an interview the bank believed intergovernmental agreements on the Nabucco pipeline could be signed in July, after which the EBRD was ready to take a senior role in financing the project.

“We would like to be a substantial financier within the context of an international consortium consisting of international financing institutions and hopefully commercial banks,” Puliti said.

The EBRD can finance up to 35 percent of projects it invests in but Puliti said the bank will remain below that threshold in the case of Nabucco.

“By statute it would be up to 35 percent (but) Nabucco is such a huge project that we’ll not be able to do that,” he said.

The 3,300 km Nabucco pipeline project, designed to reduce the dependence of the 27-member EU on Russian gas, could ship gas from Iraq, Egypt, Iran, Azerbaijan and possibly Russia and Turkmenistan through Turkey and into Europe after its expected opening in 2014. “I think that the EBRD should be playing its role as a catalyst of commercial banks so it should play its role to put a substantial amount of money and be able to attract commercial banks to participate as well,” Puliti said.

Shareholders of Nabucco, which has had trouble securing gas supplies, are Austria’s OMV, Bulgaria’s Bulgargaz, Germany’s RWE , Hungary’s MOL, Romania’s Transgaz and Turkey’s Botas.

Russia, the world’s biggest energy supplier, wants to build its own routes to bypass ex-Soviet transit country Ukraine after rows in recent years over price. Its South Stream project is scheduled to start by the end of 2015.

Europe, which gets a quarter of its gas from Russia, needs to build up reserves as Moscow’s price debates with Ukraine have hampered supply, most recently in January, when millions in east Europe were left freezing.

Scheduled to be operational by January 1, 2010, the Hungarian strategic storage facility will be able to ensure continuous supply of gas for at least 45 days at a peak capacity of 20 million cubic metres per day.

“This will make the Hungarian economy, as well as the region, more resilient to disruptions in gas imports,” the EBRD said in a statement. Hungary imports 80 percent of its gas needs from Russia.

The EBRD, which earlier this year invested 70 million euros to finance the acquisition of a gas storage facility by Croatia’s Plinacro, said it was planning to invest in four other storage facilities in Bulgaria, Serbia, Romania and Moldova.

“We are looking at around 4 billion cubic metres in all,” Puliti said. He said the EBRD aimed to have at least three projects financially sealed by mid-2010 and all four could be filled by the winter of 2010/2011.

“We are trying to make Europe as much as possible ready to mitigate a possible disruption in gas in the future”.


Related posts

Discussion Policy

Comments are welcomed and encouraged. Though you are fully responsible for the content you post, comments that include profanity, personal attacks or other inappropriate material will not be permitted. Asbarez reserves the right to block users who violate any of our posting standards and policies.