US$10.3 billion project: Shell, Uniper, Wintershall, OMV and Engie sign on for US$1.031 billion each; Gazprom to carry the remaining US$5.16 billion
Five international energy companies have signed financing agreements with Nord Stream 2 AG, each providing partial funding for the planned Nord Stream 2, Russia-to-Germany gas pipeline.
Shell (ticker: RDS.A), ENGIE (ticker: ENGI), OMV (ticker: OMV), Uniper (ticker: UN01) and Wintershall, a subsidiary of BASF (ticker: BAS), have each signed agreements to fund 10% of Nord Stream 2. The project has a total projected cost of €9.5 billion, or US$10.31 billion.
Each company will provide a long-term funding facility of €285 million expected to be drawn down in 2017. In addition, funds of up to €665 million will be provided to cover a combination of short and long-term funding and guarantees.
The remaining 50% of the pipeline cost will be paid by Russia’s Gazprom, which wholly owns Nord Stream 2 AG and will own and operate the competed pipeline.
Financial structure designed to circumvent obstruction
Several EU officials have challenged the project in the past. A previous plan by the five companies to fund the project through a joint venture was blocked by the Polish government. The current financial structure is specifically designed to circumvent Polish objections and is more likely to avoid obstruction.
5.32 Bcf/d undersea pipeline
Nord Stream 2 would stretch from the Narva Bay in Russia to Lubmin, Germany, traveling under the Baltic Sea. With a total length of nearly 750 miles, Nord Stream 2 will be one of the longest underwater pipelines in the world. The pipeline will follow the route of the existing Nord Stream pipeline for the vast majority of its distance.
Like the current Nord Stream pipeline, Nord Stream 2 will have two individual lines with a combined capacity of 5.32 Bcf/d. The four individual strings of the Nord Stream and Nord Stream 2 pipelines therefore will deliver a total of 10.64 Bcf/d of gas to European markets. First considered in 2013, the project is expected to be complete by the end of 2019.
