PARIS: Western partners of gas giant Gazprom agreed on Monday on financing the 9.5-billion euro ($10.32 billion)Nord Stream 2 pipeline, removing a big hurdle for a Russian plan to pump more gas to Europe.
The commercial endorsement of the project by Western firms offers Russian state-owned Gazprom, which already supplies around a third of the EU's gas, fodder to counter critics of a project that has divided opinion in Europe.
Eastern European and Baltic countries say a new pipeline carrying Russian gas across the Baltic will make the EU a hostage to Moscow, while those in northern Europe -- especially main beneficiary Germany -- see the economic benefits.
At a signing ceremony in Paris, Uniper, Wintershall, Shell, OMV and Engie agreed to each loan 10 percent of the cost of the venture, or up to 950 million euros each.
Gazprom will shoulder 50 percent of the cost of the 55 billion cubic metre pipeline, which is due to start operating in 2019.
"It is especially important that leading European energy companies are joining," Gazprom Chief Executive Alexei Miller said. "It is a symbol that the Nord stream 2 project will be a reliable transport route to guarantee the security of Russian gas supplies to Europe."
Opponents of the project also worry it would sharply reduce the need for Russia to export gas through Ukraine, depriving Kiev of lucrative transit fees.
Last July, Gazprom's Western partners withdrew from pledges to provide 1.2 billion euros of equity for the pipeline, a twin to Nord Stream 1, which began pumping in 2011, after Poland's cartel office blocked its clearance.
French gas and power group Engie's Chairman Gerard Mestrallet told reporters the new financial structure would allow Western partners to circumvent Polish government objections to the project.
"I hope that the pan-European support will bring financial aid to the great project led by our Gazprom friends," Mestrallet said at the signing ceremony.
The timing of the announcement is likely to influence deliberations by EU nations, including France and Germany, on whether to give the European Union a mandate to negotiate with Russia over objections to the pipeline.
"The sceptics and the pessimist have been proven wrong," former German Chancellor Gerhard Schroeder, now chairman of the board of directors of Nord Stream 2, said. "Nord Stream 2 is on track. Pipe production is moving forward at full speed."
However, uncertainty remains over the project's final approval as the European Commission is politically opposed to the project and has argued that it falls foul of EU gas market liberalization rules.
EU sources say the Commission is cultivating uncertainty to scare Western investors to at least stall its construction until after 2019, thereby depriving Gazprom of a lever in negotiations on a new gas transit contract with Ukraine due to expire that same year.
But the EU's own lawyers as well as the German energy regulator, the Bundesnetzagentur, have rejected the Commission's bid for EU energy rules to be applied to the pipeline, which will be built along the Baltic Sea bed.
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