The International Finance Corporation (IFC) has approved US$71.5 million in financing for its first two projects in the Russian Federation. Russia became a member of IFC on April 12, 1993. Both projects are in the oil and gas sector, and their combined cost is estimated at US$377 million. Since 1991 IFC has been providing technical assistance in support of privatization reforms in Russia. Working closely with the Russian Ministry of Privatization, IFC has designed and implemented privatization pilot programs that are being replicated elsewhere in Russia. Polar Lights Company to receive IFC financing IFC is to provide the Polar Lights Company with a loan of US$60 million to help finance the development of the Ardalin oil field in northern Russia. Polar Lights, which is a 50-50 joint venture between Conoco Inc. of the United States and Arkhangelskgeologia, a Russian enterprise, will drill development wells, establish a treatment facility, and build a 36-mile pipeline to connect with the existing Russian network
. The Company expects to export up to 82 million barrels of crude oil to Europe.
The European Bank for Reconstruction and Development has approved a loan of US$90 million for the project, and the Overseas Private Investment Corporation of the United States is to provide an additional US$50 million loan. IFC financing of Vasyugan Services Joint Enterprise IFC is to provide the Vasyugan Services Joint Enterprise with a loan of up to US$10 million and a quasi-equity investment of US$1.5 million to help finance a project that will increase the output of existing oil and gas wells in the Tomsk region of western Siberia at an estimated cost of US$37 million. Vasyugan Services Joint Enterprise is a joint venture between Canadian Fracmaster and two Russian entities, Tomskneft Production Association and Vasyugan Production Division. The company will use modern oil well fracturing methods that are not yet widely used in Russia to attain a significant production increase from the wells it services. Additional financing for the project is to come from the European Bank for Reconstruction and Developm
ent. The oil and gas sector has the potential to lead Russia's economic recovery, based on the analysis of the World Bank experts. "Greenfield oil field development projects such as Polar Lights can provide the necessary foundation for the long-term increase in Russian oil production." said Azam Alizai, IFC Director of Oil, Gas and Mining Department. "In addition, well servicing projects such as Vasyugan can provide an example of the scope of IFC's involvement in the various aspects of the private sector upstream oil and gas business. We hope that these will be the first of many opportunities IFC will have to support this critical sector of the Russian economy." IFC is the member of the World Bank Group that promotes private sector investments in developing countries. To date, IFC has provided US$11 billion in financing to more than 1,000 companies in more than 100 developing countries.
