Uzbekistan, Tashkent, July 11 / Trend D.Azizov /
The Multilateral Investment Guarantee Agency (MIGA, part of the World Bank Group), has provided investment guarantees worth $120 million as part of the implementation of a production sharing agreement (PSA) on a project of the Russian Lukoil, Kandym-Khauzak-Shady-Kungrad in Uzbekistan, Lukoil Uzbekistan Operating Company Ltd, operator of the company's projects in the country, said on Wednesday.
According to the operator, guarantees have been provided on loan from the BNP Paribas bank worth $50 million allocated in a project to increase production at the Khauzak-Shady site.
In accordance with the terms of guarantee, the project shall comply with the standards of MIGA on social and environmental sustainability. In particular, Lukoil has prepared a plan for the conservation of bio-diversity of wetlands near Lake Dengizkul, which is adjacent to the Khauzak-Shady field.
As previously reported, in March 2012, Lukoil Overseas Holding Ltd (the operator of international projects of Lukoil) signed a loan agreement with a consortium of international banks to the sum of $500 million to increase production at Khauzak-Shady.
The agreement was signed on the principles of limited regress for financing for the development of the Kandym field and increasing production in the Khauzak-Shady field.
The consortium includes the Asian Development Bank (ADB), Islamic Development Bank (IDB), Credit Agricole CIB, BNP Paribas (Suisse) SA and the Korea Development Bank (CDB).
In particular, ADB and IDB provide $100 million credit funds each for a period of eight years. The other three consortium banks provided $ 175 million over seven years: KDB - $75 million, BNP Paribas and Credit Agricole - $50 million each.
Under the agreement, the remaining $125 million will be received by the borrower on the agreement of creditors within 18 months from the date of signing the loan agreement. This amount can be obtained by increasing the participation of consortium banks or attracting new lenders. Tranches of banks are covered by the guarantees of ADB and MIGA.
In autumn 2007, Lukoil started gas production in Uzbekistan within the framework of the Kandym-Khauzak-Shady-Kungrad PSA signed in 2004 for a term of 35 years. In 2010 the company brought the production of gas in the project up to three billion cubic meters.
According to the company, seismic 3D, as well as drilling and testing of new wells will increase production at a constant level at Khauzak-Shady in 2012 to four billion cubic meters.
In 2014 the company plans to get an early gas from Kandym field and by 2017 to bring production here up to 8-10 billion cubic meters.
Currently Lukoil works in Uzbekistan on implementation of three projects - Kandym-Khauzak-Shady-Kungrad, the development of the Southwestern Hissar fields, as well as conducts exploration of the Uzbek part of Aral Sea as part of an international consortium.
As part of the first two projects under the PSA, Lukoil plans by 2017 to produce 18 billion cubic meters of gas, to bring the volume of investment up to $5 billion. The company has so far invested $2 billion in Uzbek projects.