LONDON (Reuters) - The European Bank for Reconstruction and Development (EBRD) is considering financing of up to 1.5 billion euros (1 billion pounds) for the Trans-Adriatic gas pipeline in a record loan, its managing director of energy said in an interview on Thursday.
The Trans-Adriatic Pipeline (TAP) is part of the Southern Gas Corridor, a system of pipelines that will transport Azeri gas to European markets for the first time, reducing the European Union’s reliance on Russian gas.
“We are considering up to 500 million euros of our own money for TAP plus we will try to arrange with other banks up to 1 billion euros in a syndicated loan,” Riccardo Puliti, managing director of energy at the EBRD said.
Piliti said the loan in total would be the largest the EBRD has ever made. TAP is estimated to cost around 6 billion euros.
“Together with financing from the EIB (European Investment Bank), project sponsors’ equity and export credit agencies, I think the (project) will be fully financed,” Puliti said.
A ceremony to start the construction for TAP will be held in Greece on May 17. Rival gas pipeline project Nord Stream 2 will deliver gas directly from Russia to Germany, bypassing Ukraine.
Nord Stream 2 has triggered objections from several EU governments who say it increases dependency on Russia’s Gazprom (GAZP.MM). The United States said last week it was also concerned.
The Nord Stream-2 consortium, which includes Gazprom, E.ON (EONGn.DE), Wintershall, Shell (RDSa.L), OMV (OMVV.VI) and Engie (ENGIE.PA), says the project is commercial and that Russian pipeline gas is cheaper than liquefied natural gas (LNG).
“The major problem (with Nord Stream 2) is the capacity, the route and the politics involved in it,” Maros Sefcovic, Vice President of the European Commission for Energy Union, said in the interview.
“It might end up that instead of three transit routes for Europe there is just one. It could seriously limit supply and even close down Yamal (gas pipeline).”
Gazprom already sends gas to Germany across the Baltic Sea via the Nord Stream pipeline, and Nord Stream-2 would double the capacity of that pipeline to 110 billion cubic metres (bcm) per year.
Other transit routes to Europe from Russia include through Ukraine and the Yamal-Europe pipeline, which takes gas from western Siberia to Germany.
Reporting by Nina Chestney; editing by Jason Neely and David Evans