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U.S. sanctions preventing Russian project financing - OMV CEO
September 13, 2017 / 3:36 PM / a month ago

U.S. sanctions preventing Russian project financing - OMV CEO

Chief executive of Austrian energy group OMV Rainer Seele addresses a news conference in Vienna, Austria, August 10, 2017. REUTERS/Heinz-Peter Bader/Files

MOSCOW (Reuters) - U.S. sanctions have made financing large Russian projects “almost impossible”, the chief executive of Austrian energy company OMV, which has invested in the Nord Stream-2 trans-Baltic gas pipeline project, said on Wednesday.

Washington imposed new sanctions, several targeting Russia’s energy sector, last month to punish Moscow over alleged interference in the 2016 U.S. presidential election and the annexation of Ukraine’s Crimea.

“The financing of such large infrastructure projects becomes almost impossible after the introduction of such sanctions,” OMV CEO Rainer Seele was quoted as saying by Interfax.

The Russian state news agency also quoted Seele as saying that it was hard to raise project financing for 70 percent of the costs and that partners in the Nord Stream-2 project were ready to provide bridge financing if necessary.

Russian gas giant Gazprom has said the $11 billion project to add a second Russian trans-Baltic gas pipeline would go ahead regardless of sanctions.

Earlier this year OMV along with Uniper, Wintershall, Shell and Engie agreed to each loan 10 percent of the cost of the pipeline.

Gazprom is the sole shareholder in Nord Stream-2, shouldering 50 percent of the cost of the pipeline, which will be able to carry 55 billion cubic metres of gas a year into a terminal in Germany and is due to start operating in 2019.

A spokesman for OMV, which had free cash flow of 747 million euros at end of the second quarter, declined to comment.

A Nord Stream-2 spokesman said that while project is completely funded by its shareholder and investors, “we are looking for an optimised financing structure like a 70-30 split between bank loans and long term sponsor funding”.

“The current situation does not have an effect on the financing agreement but could influence the optimization process,” he added.

Reporting by Vladimir Soldatkin; additional reporting by Shadia Nasralla; editing by Susan Fenton and Alexander Smith

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