Azernews.Az

By Bloomberg

Romania’s Transgaz SA may sell bonds as early as this fall to finance construction of a gas pipeline to link the Balkan country’s southern region to central Europe, the head of the company said.

The natural-gas grid operator will apply for European Union funding in July to back the 560 million-euro ($639 million) project called BRUA, linking Bulgaria, Romania, Hungary and Austria, Chief Executive Officer Petru Vaduva said in an interview in Bucharest on Thursday. If the EU funds are approved, Transgaz will need to cover half the cost from its own resources, he said.

“If the European co-financing is approved, then we’ll probably have to prepare our own funding 12 months ahead of the construction, so we might issue the bonds in the fall to use the money in March,” Vaduva said.

Romania is betting that exploration off its Black Sea coast by Exxon Mobil Corp. and OMV Petrom SA may yield new gas discoveries. Transgaz would also later extend the pipeline to the Black Sea, bringing the total cost of BRUA to 1.1 billion euros, Vaduva said.

BRUA, which would link the southern Romanian town of Giurgiu to Hungary’s Csanadpalota, will stretch across 550 kilometers (342 miles) and should be ready by 2019, Vaduva said. The additional link to the Black Sea will add another 300 kilometers of pipelines, he said.

Transgaz will seek shareholders’ approval for a second time this year in a meeting scheduled for June 15 to sell bonds after the Romanian Economy Ministry, the majority owner, rejected an initial plan on April 28 and asked for a more in-depth assessment, Vaduva said.

The company plans to sell as much as 500 million lei ($128 million) in unsecured corporate bonds with a maturity of at least five years, he said.