Gazprom's Western partners agree financing for $10.3 bln Nord Stream 2 pipeline

REUTERS photo

Western partners of gas giant Gazprom agreed on April 24 to provide half the financing for the 9.5-billion euro ($10.32 billion) Nord Stream 2 pipeline, removing a big hurdle for a Russian plan to pump more gas to Europe.

The commercial endorsement of the project by Western firms offers Russian state-owned Gazprom, which already supplies around a third of the EU's gas, fodder to counter critics of a project that has divided opinion in Europe.

Eastern European and Baltic countries say a new pipeline carrying Russian gas across the Baltic will make the EU a hostage to Moscow, while those in northern Europe -- especially main beneficiary Germany -- see the economic benefits.

At a signing ceremony in Paris, Uniper, Wintershall, Shell, OMV and Engie agreed to each loan 10 percent of the cost of the venture, or up to 950 million euros each.

Gazprom will remain the sole shareholder, shouldering 50 percent of the cost of the 55 billion cubic meter pipeline, which is due to start operating in 2019.

"It's a breakthrough," Gazprom Chief Executive Alexei Miller told Reuters. "It's a firm confirmation of foreign participation in the project, it's an important financial basis for the project to be completed by the end of 2019."

Opponents of the project also worry it would sharply reduce the need for Russia to export gas through Ukraine, depriving Kiev of lucrative transit fees.

Last July, Gazprom's Western partners withdrew from pledges to provide 1.2 billion euros of equity for the pipeline, a twin to Nord Stream 1, which began pumping in 2011, after Poland's cartel office blocked its clearance.

The European firms have been in talks since on how to share the financial burden, and despite the agreement on...

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