Bulgaria Taps Loans for TurkStream
Bulgaria’s state gas system operator Bulgartransgaz has secured €200mn ($223mn) in short-term credit from a group of lenders to fund the building of the 474-km Bulgarian section of the TurkStream gas pipeline: BalkanStream.
Nine banks stepped forward with offers to provide the financing, the operator said in a statement on October 23, with contracts signed with Citibank Europe, ING, Unicredit’s Bulgarian unit and the Moscow-based International Bank for Economic Co-operation.
Bulgartransgaz will use the loans to cover advance payments to contractors, including Saudi-led group Arkad, which received a €1.1bn contract to lay the pipeline in September, and a German-Bulgarian consortium hired to install two compressor stations for €179.4mn.
“The successful procedure ensured credits to Bulgartransgaz from banks totalling to €200mn, collateralised with cash deposits in US dollars for six months, with the possibility of another six,” the company said.
Russia’s TurkStream project comprises two 15.75bn m3/yr strings – one that will supply the Turkish market starting this year and a second that will run through Bulgaria, Serbia and Hungary and is due online in 2020 or later.
Bulgaria has promised to finish its section by 2020, Russian foreign minister Sergei Lavrov told reporters on October 21, according to Reuters. But fact that the contract with Arkad was signed so late, because of Bulgarian authorities initially disputing its win at auction, there are strong doubts this timeframe will be met. So far the line is just 11 km built.