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Russian Geoilbent joint venture receives US$ 55 million EBRD loan facility
To ensure the continued commercial development of the North Gubkinskoye and Prisklonovoye oil and gas fields in western Siberia, the European Bank for Reconstruction and Development (EBRD) is providing a US$ 55 million loan to a Russian joint-venture company, Geoilbent Ltd.
"With total estimated recoverable reserves of 300 million barrels of crude oil, the development of these fields represents an additional step towards arresting the decline of Russia's oil production," said Ron Freeman, First Vice President of the EBRD.
"The completion of the EBRD financing is a significant milestone for our Russian project," stated A. E. Benton, Chairman of Geoilbent Ltd and Chairman and Chief Executive Officer of Benton Oil and Gas Company. "This transaction will provide the necessary financing to accelerate development and immediately increase oil production from this giant west Siberia field."
Sergey Popov, Co-Director of the EBRD's Natural Resources Team, added: "Given that the company has already started production, the EBRD has structured the project on the value of the company's reserves, called a "borrowing-base" non-recourse financing. This is the first time such an innovative approach has been used in Russia."
The proceeds of the loan, which has a maximum term of eight years, will be used by Geoilbent to develop the fields at an accelerated rate. It is anticipated that over 300 new wells will be drilled and production facilities and infrastructure will be expanded to meet the increased production rates. Maximum daily production is expected to peak at 75,000 barrels, and the oil will be both exported to western markets and sold domestically. The overall cost of the development plan is estimated at US$ 329 million.
Additional benefits of the joint venture include the transfer of more advanced oil field development and recovery techniques to the region as well as job creation.
The field is being developed with careful consideration given to environmental issues and in accordance with international oil field practices. Impact on the environment is being minimised by a series of measures which take into account the local habitat and migratory habits of the wildlife. Geoilbent is also implementing a programme to ensure adequate conditions of life and economic activities for the residents of the area.
Geoilbent was established in 1991 by two Russian companies, Purneftegas and Purneftegasgeologia, which both own 33 per cent, and Benton Oil and Gas Company, a US publicly traded company based in California, which owns 34 per cent. Oil was first discovered in the area in 1980 although gas was found earlier. There are currently 40 wells producing over 8,000 barrels of crude oil daily.
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