Russian companies are starting to turn to project financing as a way to develop attractive assets, but the high cost, long lead times, complexity of the deals, and a growing lake of petrodollars in the economy mean that the number of deals can still be counted on one hand.
Last year saw Russia’s first successful project financing deal. The project company SeverTEK was set up as a joint venture between Russian oil major LUKoil and Finnish oil and gas company Fortum to develop the south Shapkino oil field in the Nenets region of Komi Republic and part of the oil rich Timon Pechora deposits. Several hundreds of millions of dollars were raised to pay for the construction of the mine and put the project into production. The European Bank for Reconstruction and Development (EBRD) played a key role in arranging the deal, which has gone very smoothly.
