Oil Report

Nabucco seen asking EIB for up to 2 bln euro -EIB

* EIB willing to contribute to Nabucco financing

* EIB expects to be asked for up to 2 bln euro

ISTANBUL, Feb 4 (Reuters) - The Nabucco consortium has approached the European Investment Bank and may seek up to 2 billion euros financing to build its natural gas pipeline, said EIB Vice-President Mathias Kollatz-Ahnen.

But the partners will have to pass legislation that approves the pipeline’s transit in their home countries before the bank would be willing to sign off on such a loan, he said.

Of the five transit countries Bulgaria, Hungary and Austria have ratified the agreements for the 7.9 billion euro European Union-backed pipeline, conceived to cut dependence on Russian gas, which makes up nearly a quarter of European consumption.

Partners in the 31 billion cubic metre capacity pipeline include Austria's OMV OMVV.VI, Hungary's MOL MOLB.BU, Germany's RWE RWEG.DE, Bulgaria's Bulgargaz, Romania's Trangas TGNM.BX and Turkey's Botas.

“The EIB, together with other (international financing institutions) have already been approached for the debt financing. Promoters could be seeking a substantial (portion) in between 20 or 25 percent of the project cost from the EIB. The bank is willing to contribute to the financing of this important project”, Kollatz-Ahnen said in an email.

International finance institutions have said they were willing to finance the project if the pipeline consortium was able to secure gas for the line, seen meeting five percent of Europe’s needs.

Kollatz-Ahnen said he expected the Nabucco Consortium to finance 30 percent of the pipeline itself.

Finding gas for the pipeline has remained the largest problem for Nabucco. Supplies from Iraq, Azerbaijan and Turkmenistan have been considered, though no secure supply agreements have been drawn up, leaving the pipeline vulnerable to rivals.

A Kremlin-backed South Stream pipeline, which has ready reserves, is competing with Nabucco in order to keep a hold on Russia’s share of the European gas market.

The Vienna-based Nabucco consortium aims to finalize investment decision of the project by the end of 2010 following an open season process, which will allow companies to bid on pipeline throughput.

The process will be a crucial indicator of demand for the pipeline. Last week Werner Auli, head of oil and gas, said the pipeline will not be built if demand is not there.

Analysts have said there may not be enough demand for traditional gas supplies in Europe to make both pipelines feasible. (Writing by Melis Senerdem and Thomas Grove)