Energy Cos. Get $9 Billion in Loans

Thursday, Oct 16, 2008

Russia’s four largest oil and natural gas companies were promised the $9 billion in aid they requested at a meeting with Deputy Prime Minister Igor Sechin on Saturday. Of that amount, $4.2 billion will go to state-owned Rosneft. The money will be used to refinance foreign debts. Besides Rosneft, the new measure will affect Gazprom, LUKOIL and TNK-BP. Those companies account for 90 percent of Russia’s gas production and 70 percent of its oil production. They sent a joint letter to Prime Minister Vladimir Putin on September 24 asking for funds to help pay their foreign debts (which total $80 billion) and finance strategic projects.

In spite of Gazprom head Alexey Miller’s statement last week that the monopoly is not experiencing financial difficulties (lenders, he said “are lining up for us”), it was allocated $1 billion from the total funds, which are part of the $50 billion the government is distributing in loans through Vneshekonombank. TNK-BP can take $1.8 billion, and LUKOIL $2 billion. LUKOIL president Vagit Alekperov stated on October 7 that his company would like to receive $2-5 billion in credit aid. LUKOIL has the highest debt of the four companies ($4.2 billion at the end of June). Sechin is a member of its board of directors. All of those figures are subject to approval by the VEB supervisory board. In general, there is a $2.5-billion cap on its loans.

Source: Kommersant