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First EBRD oil and gas loan signed in Ukraine
One of Ukraine's most promising oil and gas fields will shortly be under production following the signing of a loan agreement between a Ukrainian joint venture production company, Poltava Petroleum Company (PPC), and the European Bank for Reconstruction and Development (EBRD). The loan, for US$ 8 million, is the first EBRD investment in the Ukrainian energy sector.
Ron Freeman, First Vice President of the EBRD, who was in Kiev for the signing, said "By assisting the country in developing its indigenous resources, the EBRD can do two things: show that it is possible to create joint ventures in this sector and second, reduce Ukraine's imports of oil and gas thereby allowing it to use its hard currency earnings in other areas of its economy."
Dave Davies, General Manager of PPC, said: "PPC is extremely pleased to be working in the Poltava region and to be producing oil and gas there. This EBRD loan is extremely important for the joint venture and we hope that it will encourage further investment in Ukraine."
PPC, 51 per cent owned by the Ukrainian State Property Fund and Poltava Gasprom and 49 per cent by JKX Exploration and Production Ltd (JKX), a British independent oil and gas company, will undertake production of the Ignatovskoye oil and gas field in the Novo-Nikolaevskoye complex south of the city of Poltava in central Ukraine. It is the first fully operational oil and gas joint venture in Ukraine and the EBRD financing is expected to spur development of similar projects elsewhere in the country.
The proceeds from the loan will be used to finance the drilling of four new wells to increase production of the field, connecting the wells to the operation and production base and constructing a pipeline and rail export facilities. Daily production from the field is expected to reach 4,000 barrels of oil and 45 million cubic feet of natural gas in the first phase.
JKX already has operations in Ukraine, Georgia and Russia where it is also involved in transportation, processing and sale of hydrocarbons and derivative products in these areas.
To date the EBRD has invested ECU 161.7 million in Ukraine in six projects, with a total project cost of ECU 303 million.
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