Project Costs and Financing
A Private Investment
The implementation of the offshore gas pipeline through the Black Sea will require several billion euros of investment. This will be partially covered by shareholder equity and financed by lenders.
The exact Project budget for the South Stream Offshore Pipeline will be determined upon completion of the technical design stage and finalisation of key tenders for pipe supply, coating, laying, and logistics. These are the major cost drivers for most gas pipeline projects, conventionally accounting for over two thirds of the total budget. The remaining third will cover environmental studies and analysis, technical planning, permitting procedures, and activity costs.
The financing approach aims at covering 30% of the costs of the Project by equity from shareholders, and the remaining 70% by long-term debt, provided by a variety of potential sources such as export credit agencies, international commercial banks or multilateral institutions.
South Stream Transport appointed Crédit Agricole Corporate and Investment Bank (France), ING Bank N.V., London Branch, and RPFB Project Finance Ltd (Russia) as joint Financial Advisors to oversee the entire financing process.
A major attraction for prospective investors in the South Stream Offshore Pipeline will be its shareholding structure, involving some of the most solid market players, and its sound commercial basis. The Project is a long-term investment with strong partners and customers, relying on robust gas supplies and a predictable long-term demand. Experience from similar projects has shown that during an uncertain economic climate, the appeal of such stable and safe investments is even increasing.