1 / 14

Financing the Nabucco Gas Pipeline Project Brussels, November 9th , 2006

Financing the Nabucco Gas Pipeline Project Brussels, November 9th , 2006. Reinhard Mitschek OMV Gas International GmbH Head of International Pipeline Projects Nabucco Gas Pipeline International Managing Director. Nabucco Gas Pipeline Project New gas transmission possiblity.

elmo
Download Presentation

Financing the Nabucco Gas Pipeline Project Brussels, November 9th , 2006

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Financing the Nabucco Gas Pipeline ProjectBrussels, November 9th, 2006 Reinhard MitschekOMV Gas International GmbHHead of International Pipeline ProjectsNabucco Gas Pipeline International Managing Director

  2. Nabucco Gas Pipeline ProjectNew gas transmission possiblity • Pipeline Diameter: 56“ • Distance: 3,300 km • Investment: 4.6 bill. € • Transport capacity:max. cap. 31 bcmy

  3. Bankability issues • Shareholder Profile • Long Term Transportation Contracts • Competitive Pipeline Tariff Level • Harmonized legal framework in the region of SEE  Intergovernmental Agreement • Stable, long term foreseeable regulatory framework  Energy Community Treaty • Foreseeable economics and predictable project business plan  Exemption High cash flow with a maximum repayment period of 10 years with minimum risk

  4. Project financing structure Debt : Equity 70 : 30 Average Debt Service Cover Ratio of 1,5 Secured by Pre-Completion Guarantee fee- 70 % Investment- grade credits 30 % Others MLAs: 1500 (EIB, EBRD, IFC) direct (A Loan) 1000 indirect 500 (B loan: from commercial banks with MLA guarantee) ECAs: 1000 (JBIC, KfW etc.) OeKB 500 Commerical banks 500 Equity ca. 30 % ≥ 1,5 bn EUR Investment 5 bn EUR Shareholder Loans tbd. expected: 0 Debt ca 70 % ≤ 3,5 bn EUR

  5. Nabucco Gas Pipeline ProjectFinancial requirements • Up-front investment is most feasible model • Debt:Equity = 60:40 to 70:30 • Tenor maximum period 15 y • Total bank financing necessity 3.5 bill. € • Total investment needs:4.6 bill. € (value 2004) • Improved credit mix of sponsor group necessary

  6. Nabucco Gas Pipeline ProjectFinancial Requirements Request for (very) long term depreciation of investment in tariff model from Regulatory Authorities versus Request for mid term pay back periods from Financial Institutions

  7. Nabucco Gas Pipeline ProjectFinancial Requirements Request for tariff methodology based on low return from Regulatory Authorities versus Request for a average debt service cover ratio of 1.5 (minDSCR 1.3) needs high cash in

  8. Nabucco Gas Pipeline ProjectFinancial Requirements Development and construction of such an infrastructure project needs 8 to 10 years Request for short term contracts for a considerable part of the transport capacity from Regulatory Authorities versus Alternative for risk mitigation by long term contracts

  9. Gas Infrastructure Projects: Risk Allocation – a balancing exercise Construction risk Political risk Operational risk Environmental risk Market risk Counterparty credit risk Force majeure risk Cash flow risk Technology risk Default risk Exchange rate risk Source: Norton Rose, Presentation at Fourth Asia Gas Partnership Summit on February 20th, 2006

  10. Nabucco Gas Pipeline ProjectFinancial Requirements Need for an exemption from certain regulations Request for interventions in relation to tariffs and tariff methodology from Regulatory Authorities versus Request for a stable predictable business plan from sponsors and financial institutions

  11. Nabucco Gas Pipeline ProjectFinancial Requirements • Legal / Contractual framework - Within the EU  European Law - Within the Energy community  EC-Treaty - Outside the EU  Intergovernmental / Host Governmental Agreements • No basis for the time being for a multi cross border infrastructur project Turkey – Bulgaria – Romania – Hungary - Austria !!!

  12. Concluding remarks • Large Scale projects are in feasibility and/or development phases. The development and construction period of such projects is 6 to 8 years • Involved risk/risk reduction is highly important for the shareholders and for the creditability of the project. Taken risks have to be rewarded. • Risk mitigation and clear commitment is a joint responsibility of companies as well as governments and the European Union. • A stable and predictable legal and regulatory framework is crucial in order to provide a sound investment climate

  13. Contact Nabucco Gas Pipeline International GmbH floridotower Floridsdorfer Haupstraße 1; 1210 Vienna Austria Reinhard Mitschek Tel. +43 1 2700 371 28660 Fax: +43 1 2700 371 28669 e-mail: reinhard.mitschek@nabucco-pipeline.com

More Related