WestLB Closes Phase 2 Financing for Offshore Gas Pipeline Project
- Konstruktionsstart in Deutschland
A club of 24 banks, including WestLB as Mandated Lead Arranger, successfully closed the financing of the € 3.5 billion Phase 2 of Nord Stream´s offshore gas pipeline project that will link Russia and the European Union via the Baltic Sea. The financing of the second pipeline was closed in April 2011. Like Phase 1, it was financed with a D/E split of 70/30, of which approx. 67% is ECA covered, and was 60% oversubscribed.
The € 2.5 billion debt requirement comprises a € 750 million Hermes tranche, a € 500 million SACE facility, a € 500 million German untied loan programme facility (“ungebundener Finanzkredit”) and a € 750 million uncovered commercial tranche.
Nord Stream´s sponsors - Gazprom, E.ON Ruhrgas, Wintershall, Gasunie and GDF Suez – will use the debt to finance the second of two offshore pipelines that will run from Vyborg in Russia along the bed of the Baltic Sea to Greifswald in Germany, and from there into the European gas network.
WestLB successfully closed the financing for Phase 1 of the project in May 2010. With the completion of the second pipeline in April 2012, the nominal gas transport capacity will be doubled to 55 billion cubic metres per year. The two pipelines each dispose of a nominal gas transport capacity of 27.5 billion cubic metres per year and run parallel for approx. 1,220 km under the Baltic Sea.
In light of increasing energy demand and declining indigenous natural gas production, the Nord Stream project is crucial for ensuring the future supply of gas to the European Union.