October 3, 2019 / 1:11 PM / 14 days ago

UPDATE 1-Bulgartransgaz to seek 150 million euro loan to pay for gas pipeline

(Adds details, background)

SOFIA, Oct 3 (Reuters) - Bulgarian state gas firm Bulgartransgaz is seeking a short-term loan of 150 million euros ($164.36 million) to help finance advance payments for the Bulgarian extension of the TurkStream gas pipeline project, it said on Thursday.

“We will seek 150 million euros credit with six to twelve months maturity,” Bulgartransgaz chief executive Vladimir Malinov said.

The planned 474-km pipeline will carry Russian gas from Bulgaria’s southern border with Turkey to its western frontier with Serbia, providing a link to the Russia-backed TurkStream twin pipeline to Serbia, Hungary and Austria.

Russia, which is building TurkStream to bypass Ukraine to the south, said in July that its second leg, with annual capacity of 15.75 billion cubic meters, will pass via Bulgaria to central Europe.

Last month Bulgartransgaz signed a 1.1 billion euro contract with Saudi-led group Arkad to build the pipeline.

Under the deal, Bulgartransgaz will pay 250 million euros in advance payments to Arkad. Arkad will receive the rest of the funds in payments over 10 years once the pipeline becomes operational.

Bulgartransgaz will also have to pay in advance 40 percent of the 350.8 million levs ($196.61 million) contract it signed on Thursday with a Bulgarian-led group to build two gas compressor stations for the pipeline, Malinov told reporters.

Interested lenders will have to file their offers for the loan by Oct. 21, Malinov said, pointing out that Bulgartransgaz does not have liabilities for the time being. The loan will help pay the advance dues on both contracts, he said.

Bulgaria plans to have the pipeline operational in 2021 and expects revenues from transit fees at about 340-400 million levs annually for 20 years.

Critics say that the pipeline, which is likely to fall under the scrutiny of Brussels and Washington, is more a geopolitical than a business venture and state that it would not make profit in the first 15 years.

($1 = 0.9127 euros)

$1 = 1.7842 leva Reporting by Tsvetelia Tsolova; Editing by Jan Harvey and Alexandra Hudson

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