The Nord Stream 2 project, being pursued by Russia's Gazprom, has taken a step towards its implementation after 5 European energy companies signed financing agreements with Nord Stream 2 AG, the company responsible for the pipeline project.
The 1,220-kilometer pipeline will be able to transport a total capacity of 55 billion cubic meters of natural gas a year. It will run from the coast of Russia via the Baltic Sea to Greifswald in Germany, acting as a direct link between Russian reserves and European consumers.
The financing agreements were made with ENGIE, OMV, Shell, Uniper and Wintershall who have each committed to provide financing and guarantees for up to 10 per cent of the total cost of the project, which is currently estimated to be €9.5 billion.
Each European company will fund up to €950 million. Gazprom is and will remain the sole shareholder of the project company, Nord Stream 2 AG. In addition, funds of up to €665 million will be provided to cover a combination of short and long-term funding and guarantees. The draw down of the 665 million fund will depend on future decisions by Nord Stream 2 AG in respect of the overall financing of the project.
In a statement, OMV said: "The financial commitment by the European companies underscores the Nord Stream 2 project’s strategic importance for the European gas market, contributing to competitiveness as well as medium and long-term energy security especially against the background of expected declining European production."