Nabucco begins the search for gas suppliers

• The final investment decision will be made after securing the gas supply

The final investment decision for Nabucco pipeline project will be made by the six shareholders after gas supply contracts will be concluded and transport contracts will be negotiated with the traders.

Reinhard Mitschek, the general manager of "Nabucco Gas Pipeline International" GmbH (the project company), said: "The project company can organize the open season process for the reservation of capacity anytime, but the shareholders of Nabucco must first secure the supply of natural gas. The negotiations between the shareholders and the gas suppliers will begin in the second half of 2010, with this being the first step towards the launch of the project".

He explained that Nabucco in itself is an infrastructure company which will only transport natural gas, and it won"t do trading or sell natural gas. These operations will be performed by the suppliers.

The first stage of the first process for the reservation of capacity will be aimed at the shareholders of Nabucco, Reinhard Mitschek said. Half of the capacity of the pipeline will be offered to shareholders, as established in the Inter-Governmental agreement. In the second stage of the open season, the remaining 50% of the transport capacity of Nabucco will be made available to third parties. This approach will increase competition and will allow many companies from the project, the official of the Nabucco project company added.

In April, "Nabucco Gas Pipeline International" GmbH launched the auction qualification process for the special components needed for the construction. This process marked the beginning of the purchase of the mentioned components, needed for the construction of the pipeline. Numerous submissions were received, and the potential suppliers are still being evaluated, said Reinhard Mitschek. The first call for tenders for the purchasing of components will be launched in the following months, he added.

The recent signing of the letter of mandate with three financial institutions (the EIB, the EBRD and the IFC) marks the beginning of the evaluation process. The three aforementioned financial institutions will commit up to 4 billion Euros.

Also, major credit insurance companies such as Euler Hermes, Coface and others are very interested in the financing of this project, the Nabucco official said. The project company is already in talks with the former, but it is too early to discuss figures, said Reinhard Mitschek. "We are also waiting for the banks to provide financing at a more advanced stage of the evaluation process performed by the three financial institutions", he concluded.

The Nabucco pipeline will provide a direct connection between the regions with the richest gas deposits - the Caspian area and the Middle East, with the European consumer markets. The pipeline will connect the Eastern border of Turkey and Baumgarten in Austria - one of the most important terminals in Central Europe - going through Bulgaria, Romania and Hungary. The shareholders of Nabucco are Botas (Turkey), Bulgarian Energy Holding (Bulgaria), MOL (Hungary), OMV (Austria), RWE (Germany),Transgaz (Romania). Every shareholder holds an equal stake of 16.67% of "Nabucco Gas Pipeline International" GmbH. The investment in Nabucco is totals 7.9 billion Euros.