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Gazprom says Nord Stream 2 financing to be determined by end of year

November 28, 2016, 15:53 UTC+3

Nord Stream-2 gas pipeline is scheduled to be commissioned at the turn of 2019

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ST. PETERSBURG, November 28. /TASS/. A financing model for Nord Stream 2 gas pipeline will be determined by the end of this year, Deputy Chief Executive Officer of Gazprom Alexander Medvedev told TASS on Monday.

"We have time; intensive consultations are underway. Considering the construction schedule and funding tied to that schedule, we are confident it will be met. It means we will identify project financing by the end of the year," Medvedev said.

Nord Stream-2 gas pipeline is scheduled to be commissioned at the turn of 2019. The offshore pipeline stretched from the Russian coast to the landfall in Germany consists of two lines with each of them having throughput capacity of 27.5 bln cubic meters per year. The new gas pipeline will double the capacity of the existing Nord Stream pipeline. Capital expenses of the project are estimated at 8 bln euro.

OPAL gas pipeline

Medvedev went on to say that the first auction on allocation of capacities of OPAL gas pipeline used to supply gas delivered over Nord Stream 2 offshore pipeline may be held in January 2017.

"We reached signing of amendments, that is, a new agreement with amendments required by the European Commission. We analyzed for a long time consequences it has for us from the standpoint of access and from the standpoint of financial consequences. We considered possible to agree to them and that means the first auction may be held and capacities may be allocated after all signatures - four signatures - appear in the document," Medvedev said.

Earlier, the European Commission approved the exclusion of 50% OPAL pipeline capacity from the Third Energy Package, giving an opportunity to Gazprom to increase its gas pumping to Europe.

The OPAL gas pipeline with the capacity of 36 billion cubic meters provides an entry to the markets of Central and Eastern Europe, bypassing Ukraine. The pipeline is located in Germany and unites Russia’s Nord Stream offshore gas line with the gas transportation system of Central and Western Europe. Its construction was completed in 2011.

Anti-monopoly probe 

Gazprom will sent the final version of its proposal on settlement of the anti-monopoly probe to the European Commission by the end of December, Medvedev said. 

"It is on the final stage, we have agreed on it with the European Commission, it is clear for us and for them. We will definitely send it to them before Christmas," he said.

He added that this will be done before Catholic Christmas, December 25.

In late October, the European Commission and Gazprom made progress on settlement of the EU antitrust investigation against the Russian company in a pre-trial mode.

Gazprom reported that it was making final adjustments and will soon send the proposal to the European Commission.

The European Commission is currently conducting an antitrust investigation against Gazprom, which accuses the Russian company of abusing its dominant position on the gas market of Eastern European countries. The Commission also claimed that Gazprom possibly drove up the gas price for European consumers.

If Gazprom is found guilty of these violations, the Commission may demand that the company should pay one-time fine in the amount of 10% of its turnover. Earlier, however, both Russian and European sources reported that the parties are currently working on a mutually acceptable pre-trial solution, which does not imply payment of fines.

Supplies to Europe

According to Medvedev, Russian gas deliveries to Europe at 2016 year-end may total 175 bln cubic meters.

"Yes, it may be probably above 175 bln cubic meters," Medvedev said responding to a question whether deliveries are higher than projected export of 170 bln cubic meters.

It was reported earlier that Gazprom increased natural gas export to West Europe by 8.8% year-on-year to 103.3 bln cubic meters in January - September 2016 versus 94.9 bln cubic meters in the like period a year earlier.

West Europe remains the largest market outlet for Gazprom. Main consumers of the Russian gas in the region in nine months of 2016 are Germany (supplies up 5.9% to 34.3 bln cubic meters), Italy (down 3.5% to 18.3 bln cubic meters), and France (22% growth to 8.33 bln cubic meters). Gas deliveries to the United Kingdom surged 1.6 times to 13.2 bln cubic meters.

17.1 bln cubic meters of gas were supplied to Turkey in January - September, down 12.4%, Gazprom said. Gas deliveries to Central Europe surged 12.4% year-on-year to 23 bln cubic meters in nine months of this year.

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