Lukoil Overseas Uzbekistan has received a US$500mn debt financing provided by a consortium of international banks and partly guaranteed by Miga.

A total of US$300mn has been extended by BNP Paribas Suisse, Crédit Agricole Corporate and Investment Bank and the Korean Development Bank. Of that amount, US$119.5mn is guaranteed by Miga’s political risk cover.

The remaining US$200mn has been co-funded in equal amounts by the Islamic Development Bank and the Asia Development Bank.

With the project financing, Lukoil will develop the Khauzak-Shady Block and Kandym Field Group upstream gas facilities, both located in remote areas of the country. Once completed, the Kandym project is expected to be a major employer, foreign exchange earner, and source of revenue for the Uzbek economy.

Lukoil head of project and structured finance Oktay Movsumov says financing for the project would have been hard to find without the support of multilaterals. “It was the synergies among Miga, the Asian Development Bank, the Islamic Development Bank, and then the consortium of commercial banks that enabled project finance of this magnitude and importance for the country,” he says.

Miga senior underwriter Abir Burgul, who worked on the project, adds: “We have witnessed first-hand the attention this project has received, mainly for its ability to enable a consortium of international banks to provide project finance in Uzbekistan for the first time.”

Nicolas Jobert, director of BNP Paribas Switzerland, agrees, pointing out that Miga’s backing was a condition for the commercial banks’ participation.

Miga hopes that its involvement will encourage foreign investment in the country and improve the economy by validating Lukoil’s best practice in managing the environmental and social impacts of oil and gas projects.