Russia’s Irkutsk Oil Company (INK) has signed a US$871mn loan agreement with the Japan Bank for International Cooperation (JBIC) and a group of commercial lenders, as it works to ramp up its production of chemicals.

The Japan Bank for International Cooperation (JBIC) is providing US$522mn in export financing as part of the deal, with the remainder being lent by Deutsche Bank, Société Générale and Goldman Sachs.

Deutsche Bank is acting as facility agent, while Japan’s state insurer, Nippon Export and Investment Insurance (Nexi), will cover the portion of the funding provided by the private sector financial institutions.

The loan will back the purchase of equipment from multiple companies, including Japan’s Toyo Engineering Corporation, which will supply the main equipment for INK’s ethylene and polyethylene production facilities in East Siberia.

According to JBIC, the loan will support domestic exports and create business opportunities for Japanese companies in the Russian petrochemical sector, “thereby contributing toward maintaining and improving the international competitiveness of Japanese industry”.

“With the growing demand for chemicals such as ethylene and polyethylene in Russian and Asian markets, a number of capital investments are also expected to increase in the petrochemical sector in Russia,” JBIC says.

“INK aims to utilise its sizable gas resources and to diversify its business for the transition from the pure upstream oil production on which INK has primarily focused to the downstream sector such as the production of plastic,” it adds.

INK is the second Russian company in a matter of months to secure JBIC support, after gas producer Novatek signed a bumper financing package with a group of domestic and international lenders, including the Japanese the export credit agency, in late November.