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EBRD to make final decision on allocating loan to Lukoil

8 October 2014 16:00 (UTC+04:00)
EBRD to make final decision on allocating loan to Lukoil

By Aynur Jafarova

The European Bank for Reconstruction and Development (EBRD) will make its final decision on January 28, 2015 on allocation of a loan to Russia's Lukoil Company to finance the project of second stage of development of Azerbaijan's giant Shah Deniz field in the Caspian Sea.

The total amount of the loan is expected to be up to $1 billion, with both Mandated Lead Arrangers (MLAs) arranging $500 million each. Approximately, a half of the total loan is expected to be syndicated under the A/B Loan programs of both the EBRD and the Asian Development Bank (ADB).

The Lukoil Company has a 10 percent interest in the Shah Deniz field. The total amount of additional funding of Lukoil within the framework of the equity participation in the Shah Deniz-2 project is $3 billion.

The Lukoil Overseas Shah Deniz Ltd. also plans to receive a loan from the ADB, the approval of which is expected on November 13, 2016.

The ADB is ready to provide Lukoil Overseas Shah Deniz Ltd. with a loan worth $450 million.

The project will include two additional bridge-linked offshore gas platforms, 26 subsea wells, 500 kilometers of subsea pipelines, and the expansion of the gas plant at Sangachal Terminal and the South Caucasus Gas Pipeline expansion.

Lukoil Overseas Shah Deniz Ltd is a 100-percent daughter company of Lukoil Overseas, a holding company that manages Lukoil's participation in exploration and production projects outside Russia.

The Shah Deniz field, one of the world's largest gas-condensate fields, was discovered in 1999. Its reserves are estimated at 1.2 trillion cubic meters of gas. Overall, the field has proven to be a secure and reliable supplier of gas to Azerbaijan, Georgia, Turkey, and Europe.

The gas produced at the second stage of Azerbaijan's Shah Deniz field development will be the main source of the Southern Gas Corridor, which envisages the transportation of the Caspian gas to the European markets.

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