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. Last Updated: 07/27/2016

Gazprom Nearing Deal To Pay for $2Bln Pipeline

Gas monopoly Gazprom expects to announce part of the funding for a $2 billion Turkey-bound pipeline next month, a senior executive said.

"We will announce the funding gradually,'' board member Yury Garyainov said Tuesday.

Since Russia's financial crisis last fall, raising money for Russian capital investment has become very difficult, even for Gazprom, the world's largest natural gas producer.

Last week, Gazprom Vice President Pyotr Rodionov said the company is close to securing a loan earmarked for Blue Stream - the name given to the pipeline project - from a consortium of Western banks. On Tuesday, Garyainov declined to name the banks.

"Now, we are working on finalizing the technical issues and closing contracts with contractors,'' Garyainov said.

The construction of the sea stretch of the 16-billion-cubic-meter pipeline is due to begin early next year, said Garyainov. Earlier, Gazprom said the work was scheduled to start in the third quarter of this year.

Building in Turkey has already begun, Garyainov said.

The 1,200-kilometer pipeline will contain a 400-kilometer stretch on the Black Sea bed, making it one of the most ambitious pipeline projects to date.

The ownership and cost of the pipeline will be split between Gazprom and the Italian state oil and gas company ENI.

With the help of the Blue Stream and Gazprom's other mammoth project, the 12,000-kilometer Yamal-Europe project, the Russian company intends to increase its exports by around 20 percent by 2010, Garyainov said.

Exports are vital for Gazprom, given that the company collects payment for only around one-fifth of its domestic gas deliveries. A complex network of pipelines already under construction, Yamal-Europe is planned to connect gas fields in Northern Russia to consumers in Central and Western Europe.