Russia’s Gazprom Neft has received a €258mn, 10-year unsecured syndicated loan backed by the Export Guarantee and Insurance Corporation of the Czech Republic (Egap) for the upgrade of its Serbian oil refinery.

HSBC acted as global arranger, mandated lead arranger and lender and provided €100mn. The other mandated lead arrangers and lenders are Czech banks Ceska Sporitelna and Komercni Banka, extending €79mn each.

According to Gazprom Neft, this is the first time the firm has received ECA support on one of its loans, and one of the largest loans covered by an ECA to a Russian counterpart this year.

HSBC director of project and export finance Sam Lippitt tells GTR: “Egap was strongly motivated to support the transaction, given the importance of Gazprom group and the Russian market in general to Czech companies. The Czech Republic has a lot of refinery technology, and as such this is a key export sector for them. Russia is moreover once of the largest destinations for Czech exports in general, and the largest market for Egap by underwritten volume.

“Export credit represents a useful source of long term funding for Gazprom Neft, particularly given the significant volume of capex they have planned for the coming years.”

Alexei Yankevich, deputy CEO and CFO of Gazprom Neft, says: “The arrangement allows us to borrow at a lower rate and for a longer period. The company will continue to work on optimising its debt portfolio by seizing various opportunities to lengthen the debt maturity profile and lower the interest rates.”

The proceeds will be used for the purchase of equipment and services to upgrade the Pancevo oil refinery of NIS, Gazprom Neft’s Serbian subsidiary, engaged in the exploration, production, refining and sale of oil and gas products. In particular, the loan will be used to modernise the plant and build a facility for light hydrocracking and hydrotreatment.

The agreement has yet to be approved by the company’s board of directors.