From wire reports, ST. PETERSBURG - The Overseas Private Investment Corporation, a U.S. government agency that advances America's business interests abroad, signed a deal Sept. 22 committing itself to guarantee financing of a $130 million loan for Lukoil to build an oil export terminal on the Gulf of Finland.
The deal, which is worth a total $225 million and was also signed by Credit Swiss First Boston, was signed during the second U.S.-Russia energy summit in Russia's second largest city. It will give Russia's second largest oil company an additional export capacity of 200,000 barrels a day through the Baltic Sea.
Under terms of the agreement, the private U.S. firm HBK Fund, based in Dallas, Texas, will provide the funds in the form of a 12-year credit to RPK Vysotsk-Lukoil II, a subsidiary of Lukoil.
"We signed today a historic agreement to provide a guaranteed loan to a subsidiary of Lukoil," OPIC Vice President Ross Connelly said.
"Insufficient transportation and storage capacity for exportable oil products has been a significant problem for Russian producers such as Lukoil. With the support of a U.S. company, this project will enable Lukoil to both expand its export volume and substantially reduce its average transportation costs," Connelly said.
CSFB, which is organizing the financing for the loan, will guarantee $75 million, the bank said.
A Lukoil spokesman said that the remaining $20 million of the loan would not be guaranteed.
The Vysotsk terminal will serve for oil deliveries to destinations in Europe and the Baltic region. Construction of the first part of the terminal with a throughput of 2.5 million tons a year will get under in late 2003 or early 2004.
Working at full capacity, it will provide transit for 11 million tons of oil a year.
Lukoil has already invested 170 million dollars in the terminal, the company said.
For the Baltic states, especially Latvia, whose oil terminal at Ventspils has all but gone dry due to Russia's refusal to deliver there, news of the OPIC deal comes as a blow. Latvian leadership had been hoping that the U.S. government would lobby Russia to reconsider its policy vis-à-vis Ventspils and renew oil deliveries via pipeline.
The United States, however, appears to be focusing on ensuring strategic supplies of crude straight from Russia, which has been focusing on boosting output.
The terminal at Ventspils, which is now receiving some oil by rail, has the added advantage in that it does not freeze, while ports on the Gulf of Finland – such as Vysotsk and Primorsk – are blocked up nearly every winter because of ice.
Last winter Lukoil, along with three other Russian oil companies, appealed to the Russian government to reopen pipeline access to Ventspils once the other main ports of export had frozen or become full.
The Russian government denied the request.