WASHINGTON, D.C., February 17, 1999 ---
The International Finance Corporation (IFC) and the European Bank for Reconstruction
and Development (EBRD) will each invest up to US$200 million (Euro 180
million) in the Early Oil Project to develop the offshore Chirag Field
in the Caspian Sea.
The Early Oil Project, undertaken by affiliates of 11 international oil
companies and the State Oil Company of the Azerbaijan Republic (SOCAR),
includes the refurbishment of an existing offshore platform, drilling wells
and building subsea pipelines as well as installing terminals in Azerbaijan
and Georgia and repairing and completing two oil pipelines, through Azerbaijan
to the Russian border and to Supsa, Georgia. Production commenced in November
1997 and is currently over 80,000 barrels of oil per day.
This project is the first stage of the development of the Chirag, Azeri
and Deepwater Gunashli field complex, which is expected to cost a total
of US$10-12 billion (Euro 9-11 billion) and result in the ultimate recovery
of over 4 billion barrels of crude oil. Production is forecast to reach
more than 800,000 barrels per day in the next 10 years.
"The kind of long-term financing that the EBRD and IFC provided has
not previously been made available to the region", said Kevin Bortz,
Deputy Director of the EBRD's Natural Resources team. "The commitment
of the EBRD and IFC will send a positive signal about financing projects
in the region."
Dimitris Tsitsiragos, IFC's principal investment officer, said that the
project is designed to encourage private investment, and increase oil production
which has decreased dramatically in the region. The financing will
contribute to economic development in Azerbaijan, Georgia and Russia while
adding to local energy supply.
The EBRD and IFC will each provide financing of up to US$200 million (Euro
180 million) of which up to US$100 million (Euro 90 million) will be syndicated.
The facility will be provided by way of five separate loans by each of
the EBRD and IFC to affiliates of BP Amoco plc, Exxon Corporation, Lukoil
Joint Stock Company, Turkiye Petrolleri A.O, and Union Oil Company of California.
Citibank, Dresdner Bank and Société Générale acted as Co-Arrangers and
each contributed US$25 million (Euro 22.5 million) to the syndicated loans.
IFC, part of the World Bank Group, fosters economic growth in the developing
world by financing private sector investments, mobilising capital in the
international financial markets, and providing technical assistance and
advice to governments.
The EBRD was established in 1991 following the collapse of communism to
aid the transition from centrally planned to market economies in central
and eastern Europe and the Commonwealth of Independent States. The
EBRD is owned by 60 shareholders: 58 countries, the European Investment
Bank and the European Community, and operates with Euro 20 billion in authorised