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EBRD lends $90 million for Russian oil and gas
Bank steps in with hard-to-find long-term finance for Rosneft-Sakhalinmorneftegaz
The European Bank for Reconstruction and Development (EBRD) will lend $90 million to Rosneft-Sakhalinmorneftegaz (SMNG), a Russian company engaged in the exploration, production and marketing of oil and gas mainly from deposits on Sakhalin Island in the Russian Far East. SMNG is majority-owned by Rosneft, the state-owned vertically integrated oil and gas company, which is guaranteeing the loan.
The loan's 8½-year term will provide SMNG with long-term finance that it has been unable to obtain elsewhere. The loan will finance production drilling at Odoptu-More field (North Dome), modernise existing production and storage facilities, help implement an Environmental Action Plan, enhance the company's liquidity and strengthen its balance sheet.
The EBRD has syndicated $40 million of the loan to three commercial banks: ABN-AMRO Bank N.V. ($10 million), Raiffeisen Zentralbank Oesterreich AG ($15 million) and Westdeutsche Landesbank Girozentrale ($15 million).
The EBRD loan is important because it supports the investment programme of the major Russian oil company in the Russian Far East, said Kevin Bortz, Director of the EBRD's Natural Resources Team. "We believe this financing is also the beginning of long-term, fruitful cooperation with Rosneft and shows the Bank's commitment to supporting the oil and gas sector," he added.
"The loan is a crucial element of Rosneft's cooperation with the international financial community and its programme of ensuring access to medium and long-term financial resources. It will serve as a solid basis for further cooperation between the EBRD and Rosneft," said Anatoly Baranovsky, Chief Financial Officer of Rosneft.
In addition, the transaction should contribute to the improvement of SMNG's environmental standards through upgrades in infrastructure as well as an environmental management plan, on the basis of recommendations by international consultants. The company is to implement a comprehensive Environmental Action Plan as part of the loan agreement.
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