IFC Supports Modernization of Refinery in Romania

abarrelfullabarrelfull wrote on 11 Mar 2013 12:45

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October 20, 2005

In its first investment in the refining sector in Eastern Europe, the International Finance Corporation, the private sector arm of the World Bank Group, will provide a $82 million loan package to S.C. Petrotel-Lukoil S.A., a member of the Lukoil Group.

With this financing, IFC is contributing to Petrotel’s modernization and revamping of its refinery, which allows the company to enhance environmental, health and safety performance; improve energy efficiency; and produce petroleum products compliant with the latest European Union motor fuel standards (Euro-3 and Euro-4). It will also help to increase the company’s yield of lighter petroleum products.

The financing includes $35 million for IFC’s account and $47 million in syndications by commercial banks and underwritten by ING Bank. Russia’s OAO Lukoil acquired the Petrotel refinery from the Romanian Government in 1998 through a privatization process. Since then, Lukoil has succeeded in establishing an integrated petroleum business in Romania, including about 300 retail stations throughout the country.

Mr. Rashad Kaldany, IFC’s Director of Oil, Gas, Mining, and Chemicals, said, “IFC’s investment helps address the increasing global energy demand and a need for refineries that can process heavier crude oils. It also helps Petrotel enhance its long-term competitiveness through modernization and environmental upgrading.”

Mr. Shahbaz Mavaddat, IFC’s Acting Director for Southern Europe and Central Asia, adds, “Petrotel’s modernization and compliance with the latest European fuel standards are important measures in supporting the Romanian refinery sector’s improvement, and they are expected to bring further alignment with the EU.”

Mr. Alexander Matytsyn, Vice President of OAO Lukoil, said, “This transaction with IFC is our first deal with a multilateral financial institution to support our downstream business in Europe. It creates a good precedent for future refinery modernizations. IFC's participation— including its thorough due diligence— provided significant comfort to the Romanian people, especially on environmental issues and protection of workers rights. Working with IFC also helped us achieve long repayment periods, which make the transaction a good fit with the Lukoil Group's overall debt amortization profile."

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