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.
