The U.S. Export Import Bank is preparing to approve $245 million in financing for Permneft, an oil production unit in Russia's Perm region.
The comprehensive loan guarantee is for the first transaction the bank's board has considered under a recently concluded oil and gas framework agreement.
The proposal will be referred to Congress, which is required to review all ExIm Bank loans or guarantees exceeding $100 million.
The Permneft production association plans to buy U.S. oil and gas equipment and services valued at $271 million. Its first purchases will be $40.3 million in refinery processing equipment from Ventech Engineers, Pasadena, Tex., and $33 million in oil pumps gear from Reda, Bartlesville, Okla.
The project covers the first 2 1/2 years of a major rehabilitation of Permneft's oil fields, in eastern Russia west of the Ural mountains.
ExIm Bank will allocate its financing for Permneft in two batches with the second based on performance. The financing in each batch is to be repaid in 5 years.
The comprehensive loan guarantee extended to Permneft covers all risks of nonpayment of principal and interest. Under the framework agreement, Permneft is required to assign the hard currency proceeds from oil export sales to an offshore escrow account as security for ExIm Bank.
ExIm Bank has financed 16 other transactions in Russia, with export values ranging to as much as $100 million. Its current exposure in Russia is about $400 million.
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