Russia: Sovcomflot and Vnesheconombank Sign Bilateral Agreement

On 16 June 2011, as a part of St. Petersburg Economic Forum, Russia’s largest tanker company Sovcomflot and the State corporation “The Bank for Development and Foreign Economic Affairs (Vnesheconombank)” signed a bilateral agreement on cooperation. The document was signed by SCF’s President and CEO Sergey Frank and Vnesheconombank’s Chairman Vladimir Dmitriev.

The agreement covers: the structure of ship building finance; the acquisition and subsequent operation of conventional LNG tankers, shuttle LNG tankers, tankers designed to carry gas condensate and supply vessels for the liquefied natural gas (LNG) production project in the Yamal peninsula.

According to the document, the parties intend to develop phased financing schemes for the acquisition of ships and their operation. The implementation of this project is stipulated by the Comprehensive Plan for the development of LNG production in the Yamal peninsula, approved by the Government of the Russian Federation. “According to the International Energy Agency (IEA), by 2035 natural gas will fulfill more than one fourth of global energy demand, and its world consumption will grow by more than 50 per cent compared with the levels of 2010. The Russian Government has set the task of launching LNG production in the Yamal peninsula. Providing LNG transportation by sea, in the harsh climatic conditions of the Arctic latitudes, will require not only the mobilisation of an unprecedented volume of financial resources, but also the application of innovative approaches to the project structure and terms of financing. We expect that the experience gained by our companies, while jointly implementing the construction project and further operation of the two shuttle tankers for the Prirazlomnoye project, will help us to successfully fulfill the task”, said SCF President and CEO Sergey Frank.

SCF Group (Sovcomflot) is one of the world’s leading shipping companies, specializing in petroleum products and liquefied gas transportation. The fleet includes 156 vessels with a total deadweight of about 12 million tonnes. The company is registered in St. Petersburg with offices in Moscow, Novorossiysk, Murmansk, Vladivostok, London, Limassol, Madrid and Singapore. The Group offers a wide range of vessels and a powerful grouping of vessels, in the market segments most demanded by major Russian oil and gas companies. With its own technical development and unique approach to advanced technologies, Sovcomflot has the ability to meet the most demanding customer requirements, enabling profitable growth in a stable business environment. www.scf-group.ru

Yamal LNG is a project of the Novatek company for the construction of the gas liquefaction plant in Yamal. The total volume of investments in the development of the Yamal gas fields was assessed by the Government experts in 2010 as RUB 6.8-8 trillion for 25 years. About 20 per cent of Russia’s LNG is accumulated in the Yamal peninsula, washed by the Kara Sea. There were 11 gas and 15 oil and gas condensate fields discovered in the peninsula and adjacent offshore areas. The explored and appraised gas reserves (ABC1+C2) amount to 16 trillion m³, prospective and promising gas reserves amount to about 22 trillion m³. Condensate reserves (ABC1) are assessed as 230.7 million tonnes, oil reserves are estimated as 291.8 million tonnes. Yamal will become the key area in Russia for gas production and one of the largest in the world.

Vnesheconombank is the Russian State corporation for “The Bank for Development and Foreign Economic Affairs (Vnesheconombank)” with its headquarters in Moscow. Vnesheconombank provides a wide spectrum of services, in particular, in respect of loans and guarantees given to Russia’s exporters.

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Source: scf-group, June 20, 2011;