Shell and four European companies – Engie, OMV, Uniper and Wintershall – have signed financing agreements with Nord Stream 2 AG, the company responsible for the planning, construction and future operation of the Nord Stream 2 pipeline.
The 1,220-kilometer pipeline will be able to transport a total capacity of 55 billion cubic meters of natural gas a year. It will run from the coast of Russia via the Baltic Sea to Greifswald in Germany, acting as a direct link between Russian reserves and European consumers.
According to a statement by Shell on Monday, the five energy companies have each committed to provide financing and guarantees for up to 10% of the total cost of the project, which is currently estimated to be €9.5 billion ($10.3 billion).
Shell said that each company will provide a long-term funding facility of €285 million ($309.8M) expected to be drawn down in 2017. In addition, funds of up to €665 million will be provided to cover a combination of short and long-term funding and guarantees.
The drawdown of the €665 million fund will depend on future decisions by Nord Stream 2 AG in respect of the overall financing of the project. Gazprom remains the sole shareholder of Nord Stream 2 AG.
Nord Stream 2 AG said on Monday that the financial commitment by the European companies underscores the Nord Stream 2 project’s strategic importance for the European gas market, contributing to competitiveness as well as medium and long-term energy security especially against the background of expected declining European production.
Construction work will begin in 2018 and will be completed by the end of 2019.