Shell inks deal to help finance Nordstream 2 pipeline

Five European energy outfits, incluging Royal Dutch Shell, agreed to provide Nordstream 2 AG up to €950.0m of funds to help build the new pipeline linking Russia's natural gas reserves directly with European consumers, roughly doubling the existing capacity of Nordstream 1.

Shell, ENGIE, OMV, Uniper and Wintershall agreed to set-up a long-term funding facility of €285.0m, in addition to up to €665.0m via a combination of short and long-term credits and guarantees.

The former was expected to be drawn down in 2017.

In total, the financing agreements equate to up to 10% of the total envisaged €9.5bn cost of the project.

Nordstream 2, which is wholly-owned by Russia's Gazprom, is responsible for the planning, construction and future operation of the 1,220 kilometre pipeline which will run underneath the Baltic Sea from the Russian coast to Greifswald, Germany.

With a capacity to carry up to 55.0bn cubic metres of natural gas per year it will supplement the existing Nordstream 1 pipeline which began operating in 2011 and last year reached 80% of its maximum capacity, transporting about 43.8m cubic metres of gas to 20.0m households in the EU, according to the company's website.