Important step towards meeting Europe’s energy security demands

A mandate letter has been signed today by the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), IFC - a member of the World Bank Group -, the shareholders of Nabucco and NABUCCO Gas Pipeline International GmbH. The signing of the mandate letter by the three International Financial Institutions (IFIs) marks the start of the appraisal process of the Nabucco project, a required step towards a potential financing package of up to EUR 4 billion. The Nabucco gas pipeline project is the flagship project for meeting future EU gas demand and will diversify Europe’s pool of supplier countries.

The potential financing package will consist of up to EUR 2 billion from the EIB, up to EUR 1.2 billion from the EBRD (up to EUR 600 million for EBRD’s account and up to EUR 600 million to be syndicated to commercial banks) and up to around EUR 800 million from IFC (up to EUR 400 million for IFC’s account and up to EUR 400 million to be syndicated to commercial banks).

The mandate letter formalises the conditions under which the three IFIs will conduct their appraisal of the Nabucco project, and provides an indication of the potential level of financing. It sets out the work that will be required before a final financing decision can be taken. 

The involvement of the three IFIs is a demonstration of global and European support for the project and represents an important milestone in ensuring the overall financing of Nabucco. The early involvement of the IFIs will support Nabucco in meeting the highest standards in environmental and social risk evaluation and procurement. The appraisal of the project will include a thorough assessment of commercial, social and environmental aspects.

The Nabucco gas pipeline project addresses the EU’s priority goal of achieving energy security via the diversification of gas routes and gas supplies.  It will deliver additional volumes of gas from different sources through a new supply route to the EU member states and their neighbours.  Nabucco provides a strategic solution by enabling the transport of gas from both the Caspian Region and the Middle East.

Following the successful conclusion of the appraisal, the financing will need to be approved by the relevant governing bodies of each IFI. Export credit agencies and international banks are expected to commence their appraisal of the Nabucco project soon after the IFIs. Commitments from potential lenders are expected to be sought in 2011.

Notes to editors:

Nabucco
Nabucco is the new gas bridge from Asia to Europe. It will directly connect the world’s richest gas regions - the Caspian region and the Middle East - to the European consumer markets. The pipeline will link the Eastern border of Turkey to Baumgarten in Austria - one of the most important gas turntables in Central Europe - via Bulgaria, Romania and Hungary.

IFI’s
International Financial Institutions: the generic name given to all financial institutions operating on an international level, ranging from development banks, such as the IFC, a member of the World Bank Group and the European Bank for Reconstruction and Development (EBRD), to the European Investment Bank (EIB) and monetary authorities, such as the International Monetary Fund.

EBRD
The EBRD, owned by 61 countries and two intergovernmental institutions, supports the development of market economies and democracies in countries from central Europe to central Asia. www.ebrd.com

EIB
The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union.The Bank’s task is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States.The EIB raises substantial volumes of funds on the capital markets, which it lends on favourable terms to projects furthering EU policy objectives. The EIB continuously adapts its activity according to  EU policy developments.
Besides supporting projects in the Member States, its main lending priorities include financing investments in future Member States of the EU and EU Partner countries. The EIB operates on a non-profit maximising basis and lends at close to the cost of borrowing. The Bank's consistent AAA rating is underpinned by firm shareholder support, a strong capital base, exceptional asset quality, conservative risk management and a sound funding strategy. More information is available on www.eib.org

IFC
IFC, a member of the World Bank Group, is a global development institution focused on the private sector in developing countries. IFC creates opportunities for people to escape poverty and improve their lives by providing financing to help businesses employ more people and supply essential services, by mobilising capital from others, and by delivering advisory services to ensure sustainable development. IFC’s new investments climbed to a record $18 billion in fiscal 2010. For more information, visit www.ifc.org.

Nabucco Gas Pipeline International GmbH
Nabucco Gas Pipeline International GmbH (NIC) was set up on 24 June 2004 to develop, construct and operate the Nabucco pipeline. Headquartered in Vienna, it is defined as an unbundled midstream-company under EU law. NIC is owned by the Nabucco shareholders and is responsible for the development, construction, operation and capacity trading and allocation for the Nabucco pipeline. NIC will be the only company in direct contact with the shippers and will offer a one-stop-shop solution, operating as an independent economic entity in the market, and acting independently from its parent companies. The pipeline system will be constructed by the National Nabucco Companies (NNCs), which are subsidiaries of NIC in each of the transit countries.

Shareholder structure:

The Nabucco shareholders are: Bulgarian Energy Holding (Bulgaria), Botas (Turkey), MOL (Hungary), OMV (Austria), RWE (Germany) and Transgaz (Romania), Each shareholder holds an equal share of 16.67% of Nabucco Gas Pipeline International GmbH. The shareholders are responsible for negotiating the gas supply contracts. 

BEH
Bulgarian Energy Holding EAD is a joint-stock company with a 100% Bulgarian state ownership The structure of the Bulgarian Energy Holding EAD includes seven subsidiaries: Mini Maritsa Iztok EAD, Maritsa East 2 TPP EAD, Kozloduy NPP EAD, NEK EAD, Bulgargaz EAD, Bulgartransgaz EAD and Bulgartel EAD, the capital of which is 100% owned by the Holding. Two of the BEH subsidiaries are working in the field of gas transmission and gas supply. These companies are Bulgartansgaz EAD and Bulgargaz EAD. Bulgartransgaz EAD, as a daughter company of BEH EAD, is the proprietor and operator of the gas-transmission network on the territory of the country for transmission of natural gas to Turkey, Greece and Macedonia. The company also possesses an underground gas storage. The total length of the main gas pipelines is over 2,645 km, out of which over 1,700 km of gas pipelines are representative of the national gas transmission network. The gas transmission network for local consumers and for transit transmission of natural gas also includes 10 compressor stations and 68 gas pressure-reduction stations. A total of 12,4 billion m³ of natural gas were transited by Bulgartransgaz EAD  to the countries of the Balkan region in 2009. Bulgargaz EAD, as a daughter company of BEH EAD, possesses the only natural gas public supply licence in Bulgaria. In 2009 Bulgargaz EAD sold 2,530 billion m³ of natural gas on the domestic market.

BOTAS
The Turkish state owned company Botas is established in 1974 to transport the Iraqi crude oil to the Gulf of Iskenderun. With its headquarter in Ankara and some 2,700 employees, Botas is organized throughout Turkey to operate crude oil and natural gas systems efficiently. Botas operates around 12,000 km of gas pipeline within the country. After the completion of the Baku-Tbilisi-Ceyhan (BTC) Crude Oil Pipeline, the total crude oil pipeline system operated by Botas reached to 3,400 km. Existing transportation capacity of 80.2 million tons of oil would reaches 130.2 million tons per year through the operation of BTC. Being also a trader of natural gas, through 8 separate sales-purchase contracts with companies from 6 different countries, Botas imported and sold some 38 billion m³ natural gas in 2008, 5.2 billion m³ of this amount being LNG.

MOL
MOL Group is an international, integrated, independent oil and gas company, headquartered in Budapest with operations in EMEA and the CIS and employing over 34 000 people worldwide. MOL owns five refineries in Hungary, Slovakia, Croatia and Italy with a total capacity of 23,5 mtpa. The Wood Mackenzie global survey reports that those in Hungary and Slovakia are among the most efficient in Europe. It also operates over 1 600 filling stations, has oil and gas exploration activities in 15 countries and is active in regional gas transmission and trading. In petrochemicals, MOL Group is among the top ten polymer market players in Europe.

OMV Gas & Power
OMV Gas & Power is OMV's central company for the gas- and power business and comprises the three business units Supply, Marketing & Trading as well as Gas Logistics and Power. The sustainable growth strategy of the business segment focuses on four main objectives: optimising and enlarging OMV’s natural gas portfolio, expanding the logistics business, further strengthening the gas trading and distribution activities as well as extending the value chain by embarking on the power business. This way all processes along the gas value chain – from exploration and production, transport, storage and marketing to power generation in gas power plants – are integrated into the group. In the business unit Supply, Marketing & Trading in 2009 OMV Gas & Power and EconGas sold 8.5 bcm, Petrom Gas sold 4.6 bcm. With an exchanged volume of 23 bcm in 2009, and the expansion of the service portfolio by gas exchange activities the Central European Gas Hub developed into one of the most important gas hubs in Continental Europe. In the business unit Gas Logistics the total transportation volume sold in 2009 was 75.3 bcm. In addition to supplying gas for Austria, the OMV gas pipeline system carries gas to Germany, Italy, France, Slovenia, Croatia and Hungary. Not the least by the leading role in the Nabucco Gas Pipeline project, the security of supply with natural gas should be further strengthened.

RWE
RWE is one of Europe’s five leading utilities. The Group, founded in 1898, is active in the generation, trading, transmission and supply of electricity and gas. With more than 70,000 employees, RWE AG recorded €48 billion in revenue in fiscal 2009. The Group has a customer base of over 16 million in the electricity and 8 million in the gas business. RWE is investing some €7 billion annually in environmentally-friendly and flexible generation capacity. Over €1.4 billion of that will go towards renewables, mainly wind and biomassRWE Supply & Trading is one of the leading European energy trading companies and it is also among the leading companies in the European gas industry. RWE Supply & Trading is responsible for all of the RWE Group’s activities on the international energy procurement and wholesale markets. In addition, the company optimises the complete gas portfolio of the Group, from short- to long-term procurement and delivery commitments. The RWE Group currently handles a 50 bcm/a gas supply portfolio in Europe, a gas production of more than 3 billion cubic meters per year and gas storages with a capacity of some 6.4 billion cubic meters.

TRANSGAZ
The Romanian National Gas Transmission Company Transgaz, with its headquarters in Medias, has been established in April 2000, as a result of a legal unbundling of the former vertically integrated national gas company Romgaz. The registered capital of Transgaz is owned 73,5 % by the Romanian state, represented by the Ministry of Economy and Finance, 15 % by the Proprietatea Fund and 10 % was listed on the Romanian stock exchange on January 2008 and 1,5% since May 2009. The main object of activity is the natural gas transmission, dispatching and international transit, as well as research and design in the natural gas transmission field. Over the last four years, through the National Transmission System natural gas quantities between 15.2 bcm (2006) and 11.5 bcm (2009) have been transported. Currently Transgaz operates over 13,000 km of pipelines. The turnover of the company for the year 2009 was EUR 280.2 million.

For further information, please contact:

NABUCCO Gas Pipeline International GmbH:
Christian Dolezal, tel.: +43 1 27 500 -28566, e-mail: christian.dolezal@nabucco-pipeline.com
Or Louise Ballard, Grayling, tel.: +44 207 592 7933, e-mail: nabuccolondon@grayling.com

EBRD Contact:
Anthony Williams, tel.: +44 20 7338 6997, e-mail: williama@ebrd.com
Or Ina Coretchi, tel: +44 20 7338 7874, e-mail: coretchi@ebrd.com

IFC Contact: Josef Skoldeberg, tel.: +1 202 473 6978, e-mail: jskoldeberg@ifc.org