Russian-US JV becomes $ 55 mm EBRD loan for giant Siberia field

Nov 21, 1996 01:00 AM

Benton Oil and Gas Company has announced that its Russian joint venture, Geoilbent Ltd., has completed a $ 55 mm loan with EBRD. This facility will ensure the continued commercial development of the North Gubkinskoye and Prisklonovoye oil and gas fields in western Siberia. "With total estimated recoverable reserves of 300 mmb of crude oil, the development of these fields represents an additional step towards arresting the decline of Russia's oil production," said Ron Freeman, Vice President of the EBRD. The transaction will provide the necessary financing to accelerate development and immediately increase oil production from this giant west Siberia field. Given that the joint venture had already started production, the EBRD has structured the project on the value of the project'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 bpd of oil, and the oil will be both exported to western markets and sold domestically. The overall cost of the development plan is estimated at $ 329 mm.Geoilbent was established in 1991 by two Russian companies, Purneftegas and Purneftegasgeologia, which both own 33 %, and Benton Oil and Gas Company, a US publicly traded company based in California, which owns 34 %, Oil was first discovered in the area in 1980 although gas was found earlier. There are currently 40 wells producing up to 8,000 bpd of oil.

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