Lotos signs senior debt with two banks for Baltic sea oil field

Subscribe to our newsletter and get the latest news and business opportunities in your inbox
Lotos signs senior debt with two banks for Baltic sea oil field

LOTOS Petrobaltic has entered into agreements with Polskie Inwestycje Rozwojowe (PIR), Bank Gospodarstwa Krajowego and Bank Pekao S.A. for the financing of the development of the B8 oil field in the Baltic Sea.

B8 field is the first oil production project in Central Europe to be funded on a project finance basis. The project is worth nearly PLN 1.8 billion (US$565.7 million).

The banks will jointly provide financing of approximately PLN 660 million. PIR is has committed PLN 430 million.

The agreements have been entered into as part of implementation of the memorandum of understanding signed by LOTOS Petrobaltic and PIR on October 7th 2013.

The B8 field licence and a drilling platform will be transferred by LOTOS Petrobaltic to the SPV as a contribution in kind. The SPV will carry out the remaining development work on the B8 field, including conversion of the drilling platform into a production centre, preparation of subsea infrastructure and drilling of the last injection wells before the start of production.

The production potential of the project has been estimated at 3.5m tonnes of crude. Commercial production from the field is expected to be launched late in 2015. Annual production is estimated at about 250 thousand tonnes of crude (about 5.3 thousand barrels of oil equivalent per day (boe/d)). Crude extracted for the B8 field is to be delivered to the LOTOS refinery in Gda?sk, while the associated gas will be supplied to a CHP plant in W?adys?awowo.

W?odzimierz Karpi?ski, Minister of State Treasury of the Republic of Poland, stated:

This is a very important investment, consistent with our strategy of supporting projects which involve hydrocarbon exploration and production by Polish companies. We estimate that annual volume of production from the B8 field should be equal to at least one third of the current production of crude in Poland. Following completion of the project, the share of the Baltic Sea fields in Poland's domestic hydrocarbon production should double, to 33%.

Pawe? Olechnowicz, CEO of Grupa LOTOS S.A, commented:

The hydrocarbon production segment is the priority in the LOTOS strategy until 2015 and will remain the main focus of the Company's development until 2020. The Baltic Sea is identified as the key operating area for LOTOS Petrobaltic in the Efficiency and Growth 2013-2015 programme. According to available geological data, the company’s potential reserves in the Baltic Sea licence areas are estimated at nearly 30 million tonnes of crude oil.

Mariusz Grendowicz, President of the PIR Management Board, stated:

The project that PIR is now executing in partnership with LOTOS is an excellent example of successful pursuit of the fund's mission. Through advanced financial engineering, we have succeeded in creating conditions that enabled the banks to provide long-term credit facilities. In our part of Europe, no-one has yet carried out such a complex and multifaceted transaction in the crude oil production segment.

Share this news

Join us

In order to get full access to News section, you must have a full subscription. You can check all the benefits of becoming a member and purchase a subscription on our membership page.