Economic and Financial aspects

What principles are applied in issuing calls for bids and awarding contracts (procurement)?

All contracts are awarded on the basis of tenders in accordance with international practice. A final decision to award a large contract is reached jointly by the shareholders.

How is the project financed?

Nord Stream AG is a commercial enterprise whose financial position is underwritten by its shareholders. These include some of Europe’s leading and financially strongest companies: Gazprom, BASF/Wintershall and E.ON Ruhrgas.

Dutch gas infrastructure company Gasunie will be joining the consortium. The project’s financing is therefore secured in every respect. Estimated investment into the project is 7,4 billion Euro.

As for the overall financing structure, about 30 per cent of the project costs will be met by equity contributions from the shareholders, with 70 per cent to be financed externally through limited recourse finance, with lenders to be determined in the near future.

Is it true that an offshore pipeline is more expensive than an onshore pipeline?

In general, the total cost of ownership (TCO), which consists of initial investments and operating costs, is lower for an offshore than an onshore pipeline.

Initial investments depend on factors such as the depth of the water and seabed conditions. Both factors are favourable in this project.

Operating costs are lower because we do not need compressor stations. In onshore pipeline projects compressor stations are required every 200 kilometres.

The cost savings from operations will more than offset the higher costs of investment. Calculated over a period of 25 years, total costs are some 15 per cent lower for an offshore than an onshore pipeline.