IFC APPROVES US$57.5 MILLION FOR OIL PROJECT IN KAZAKHSTAN
Jeanne Segal
(202) 473-0393
WASHINGTON, D.C., June 29 -- The International
Finance Corporation (IFC) has approved its first investment in Kazakhstan's
oil and gas sector -- US$57.5 million in financing for Kazgermunai (KGM),
a limited liability joint venture company owned by Kazakh PO Yuzhkazneftegaz
and two German partners, Veba Oel AG and Erdol Erdgas Gommern GmbH. The
European Bank for Reconstruction and Development (EBRD) and Kreditanstalt
fur Wiederaufbau (KFW) of Germany are also expected to provide financing
to KGM. KGM will develop the Akshabulak oil field in central Kazakhstan,
and build a 65 kilometer pipeline to connect the field with the country's
pipeline network. The project's estimated cost is about US$296 million.
Production is scheduled to start in mid-1996 and will peak at about 19,000
barrels per day in 1998. The project will reduce Kazakhstan's crude oil
imports from Russia and will earn substantial foreign exchange for the
country by increasing its exports to Western Europe. IFC's Board has approved
a US$40 million
senior loan for IFC's own account, an additional US$7.5 million senior
loan to be syndicated with banks, and a subordinated loan of US$10 million
for IFC's own account. EBRD is expected to provide KGM with similar loan
financing totalling US$57.5 million, and a US$75 million loan from KFW
is also planned. "Kazakhstan has a strong comparative advantage in
the oil and gas sector, and this could become the most important sector
in the country's economy," said Mr. A. Alizai, Director of IFC's Oil,
Gas, and Mining Department. IFC is a member of the World Bank Group and
is the largest multilateral source of equity and loan financing for private
sector projects in developing countries.
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