News // Oil and gas worldwide
Tyumen Oil Receives Loan to Stabilize Production at Its Ukrainian Refinery
24 March 2001 , 07:00323
TNK-Ukraina, a fully-owned subsidiary of Tyumen Oil Co., has received a $50 million loan, arranged by Westdeutsche Landesbank Girozentrale (WestLB), to stabilize production of its Lishichansk (LiNOS) refinery in the Ukraine.
Under an agreement signed Feb. 12, WestLB is arranging a 12-month revolving credit facility to TNK-Ukraina to be partially guaranteed by Tyumen Oil. WestLB is syndicating the facility to Raiffeisen Zentralbank and other banks. The package is the largest loan ever arranged for a private Ukrainian company without a sovereign guarantee. It is also a landmark transaction due to an innovative structure that maximizes security to the lender and helps ensure stable refinery operations. The funds were granted Monday.
Tyumen Oil, through TNK-Ukraina, acquired 67 percent of LiNOS' shares in July 2000, in the company's first acquisition outside Russia. The acquisition was part of Tyumen Oil's strategy to expand the company's presence in selected markets. In recent years, the refinery's growth had been limited by an inability to finance purchases of crude oil. With the additional financing, TNK-Ukraina aims to become the second biggest Ukrainian company in sales revenue by the end of 2001.
``This facility helps to support our efforts to develop the LiNOS facility into the Ukraine's top producer of refined petroleum,'' said Tyumen Oil President and CEO Simon Kukes. ``We are also pleased that our track record in company restructuring has given banks confidence to work with us in Ukraine.''
The company is carrying out an investment program to modernize the plant over the next five years and to exceed the design capacity of 132 million barrels per year of crude oil processing. The refinery is currently producing over 2 million barrels per month of refined products, including gasoline, diesel, fuel oil, polypropylene, ethylene and other chemicals. Last November, Texaco and Tyumen Oil signed a memorandum of understanding to consider the construction of a lubricant blending plant attached to the LiNOS refinery. Texaco and Tyumen Oil also intend to work together to establish a joint venture to build and operate Texaco Star Mart convenience stores, in conjunction with Tyumen Oil service stations, in the greater Kiev area. The company's goal is to capture at least 20 percent of the Ukrainian retail market by the end of 2002.
Westdeutsche Landesbank Girozentrale (WestLB) is one of the largest credit institutions in Germany, drawing on total assets of almost 393.2 billion euros as of year-end 2000. It consists of 17 branches in Germany, and 58 outlets in 35 other countries. Since 1998, WestLB has successfully syndicated over $650 million in credit facilities for Tyumen Oil, in the amounts of $300 million, $150 million and $200 million that were used to increase the company's working capital, establish ownership in subsidiaries and fund acquisitions.
Tyumen Oil, established in 1995 and owned by the Russian Alfa Group and US-Russian Access/Renova, has proved crude oil reserves of more than 8.2 billion barrels and produces more than 800,000 barrels of crude per day. It ranks No. 2 in reserves and No. 4 in production among Russian oil companies, and was named the world's ``Best Oil and Gas Company'' of 2000 by Financial Times Energy. Tyumen Oil owns and franchises a chain of nearly 800 branded retail gasoline stations in Russia.
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