The FINANCIAL — The EBRD has agreed to provide a five-year loan of $8 million to finance the initial development of an Arctic oilfield in the Komi Republic in the northeast part of European Russia by a small independent operator committed to environmental improvements and transparency.
The borrower is Russia’s Pechora Energy, a 100 percent subsidiary of UK-registered Concorde Oil and Gas plc. Pechora Energy holds the license for oil and gas production at the Luzskoye oilfield, situated in the Timan-Pechora basin, a mineral-rich triangle of 320,000 square km of the Komi Republic, where extreme Arctic conditions prevail.
Under the loan agreement the company has committed to minimise the use of gas flaring by building a heating plant which will use the associated gas the field produces.
In addition to adopting an environmental plan agreed with the EBRD, Pechora Energy has also undertaken to publish on its website, in both English and Russian, details of payments made to the Russian authorities under a Publish-What-You-Pay policy.
The Luzskoye field, which currently has proven reserves of 10 million barrels of oil, is too small to be considered by the oil majors which dominate the area and for whom developing this field would not be profitable. It is precisely this type of field that a small independent upstream operator such as Concorde Oil and Gas targets.
Kevin Bortz, Director of the EBRD’s Natural Resources team, said “the Bank is happy to support an independent oil company committed to what are key principles for the EBRD when financing the natural resources sector.” We regard boosting Russian oil production capacity as an important goal in the current economic context, he added.