Nord Stream Completes Phase II Financing

• 2.5 billion euros secured in international project finance market
• Pipeline project confirms financial backing from 24 banks
• Construction of Nord Stream meeting schedule targets

March 4, 2011 | Zug/Berlin | Financing for the Nord Stream project is secured: Today, the company together with its shareholders in the consortium, OAO Gazprom, E.ON Ruhrgas AG, BASF SE/Wintershall Holding GmbH, N.V. Nederlandse Gasunie, and GDF SUEZ S.A. announced the successful signing of Phase II financing of the pipeline project. The project financing for Phase II amounts to 2.5 billion euros.

Matthias Warnig, Managing Director of Nord Stream AG, said: “The completion of Phase II financing marks a major milestone in the project’s evolution. With construction of Line 1 of Nord Stream nearly complete and with construction of Line 2 due to start in May, it is clear that lenders see Nord Stream as a solid project with a sound economic background.” Mr Warnig sincerely thanked Nord Stream’s shareholders and lenders for their continued support in bringing the company another step closer to finalising a project of huge importance to energy security in Europe. “Nord Stream is on track to deliver gas to Europe from later this year”, he added.

This financing comes partly from Nord Stream’s shareholders who are providing investment totalling 30 percent of the total project cost pro rata to their holding in the company with 70 percent external project financing from the bank market. OAO Gazprom holds 51 percent, E.ON Ruhrgas AG 15.5 percent, BASF SE/Wintershall Holding GmbH 15.5 percent, N.V. Nederlandse Gasunie and GDF SUEZ S.A. each hold 9 percent.

Twenty-four banks are participating in a deal that was oversubscribed by 60 percent and that mirrors the solid and successful financial structure of Phase I financing that took place in early 2010. The high interest in Nord Stream’s Phase II financing attests to the continued strategic importance of the pipeline project bringing Russian gas to the European market as well as the excellent progress made in the construction of the pipeline. Line 1 is due for construction completion in April 2011, the start of pipe laying for Line 2 will commence thereafter with completion due in April 2012.

The Export Credit Agencies providing cover for the deal are Euler Hermes and SACE with support also coming from Germany’s untied loan guarantee scheme UFK: the amount covered by these agencies totals approximately 1.75 billion euros.

The very positive response from lenders has meant that Nord Stream was heavily oversubscribed for the 2.5 billion euro funding. Nord Stream has RBS, Commerzbank and Société Générale acting as financial advisers. Unicredit have a limited advisory role in connection to the untied loan programme of the German government. White & Case are acting as legal advisers to Nord Stream while Clifford Chance acts for the lenders.

Alexei Miller, Management Committee Chairman of Gazprom, said: "Nord Stream is an example of success on a pan-European scale. Over the years of planning it has won the reputation of being ecologically safe and transparent, and it is the most advanced of all the new projects aimed at transporting gas to Europe. Today the project is well on schedule. We are proud of its achievements and would like to commend the professional and efficient work of the Nord Stream team".

Klaus Schäfer, Chairman of the Board of Management, E.ON Ruhrgas AG, stated: "Natural gas will play a decisive role in the development towards a sustainable energy supply in Europe over the coming decades because it provides an efficient way of balancing economic viability, climate protection and security of supply. The latter will be significantly enhanced by Nord Stream, and the successful completion of project financing marks a very important milestone."

According to Dr. Rainer Seele, Chairman of BASF/Wintershall: "Gas production in Europe is declining steadily, which means that more gas has to be imported in the future. European supply security is a challenge, but it can be met with projects like the Nord Stream Pipeline – which provides direct access to the world’s largest natural gas reserves. This will supply Europe for decades with secure and climate-friendly energy. The 55 billion cubic meters of natural gas that will flow through the Nord Stream Pipeline to Europe equal the capacity of 55 coal-fired power plants or 20 new nuclear power plants."

Paul van Gelder, Chairman and CEO of Gasunie said: “The completion of this important phase of financing will secure vital sources of natural gas to consumers across Europe – not in the least in our North-West region of Europe. It will help us shape a sustainable energy supply that is stable and secure at the same time. Moreover, this successful financing process proves how Nord Stream has gained an excellent reputation as a solid and well-managed project.”

Gérard Mestrallet, Chairman and CEO of GDF SUEZ commented: “The successful signing of Phase II financing of the project shows the confidence of financial institutions in the Nord Stream shareholders and in the prospects of the European gas market, as well as the positive contribution of the project to the security of Europe’s gas supply.”

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