ABD to grant Lukoil with credit for $300 million for development of Uzbek deposit

The Board of Directors of the Bank for the Development of Azerbaijan (ABD) has decided to grant to Lukoil a credit and the guarantees for commercial risks for a total sum of $300 million for the development of the Kandym deposit in Uzbekistan. The Bank is going to join the consortium of the project's creditors before the end of 2011, the granting of the credit of $100 million and the guarantees for commercial risks for $200 million. The credit funds will be granted from common resources of ABD for 8 years including the beneficial period of 1.5 years. The guarantees for commercial risks are granted for 7 years.
Earlier Lukoil announced about its plans to attract a credit of $500 million under the principles of limited regress for financing of Kandym development and enlargement of production at Khauzak-Shady.
Besides from ABD, the consortium of the creditors can include the Islam Bank for Development, BNP Paribas (Suisse) SA, Korea Development Bank, Credit Agricole CIB and UniCredit Group. Besides from ABD, the guarantees for commercial risks will be secured in the Multilateral Investment Guarantee Agency (MIGA). They planned earlier to close the transaction in Q3 2011.
In autumn 2007 Lukoil began gas production in Uzbekistan within the bounds of PSA Kandym- Khauzak-Shady-Kungrad signed in 2004 for 35 years. In 2010 Lukoil raised production at the project to 3 billion cubic m. The company has an opinion that the performed 3D seismic exploration, and new wells drilling and testing will rise the level of stable production at Khauzak-Shady to 4 billion cubic m of gas in 2012. In 2014 Lukoil is going to get early gas at Kandym and to raise production there to 8-10 billion cubic m by 2017.
Currently Lukoil realizes 3 projects in Uzbekistan, the Kandym- Khauzak-Shady-Kungrad, South Western Gissar development, and geological exploration of the Uzbek part of the Aral Sea in an international consortium. Within the bounds of the first two projects the company is going to annually produce 18 billion cubic m by 2017 under PSA terms, and to raise investment from the current $1.5 billion to $5 billion.
Translated by Nadezhda Poltoratskaya
Source: http://www.newsazerbaijan.ru//oilgas/20111007/296436335.html