Ross Connelly, executive vice-president and chief operating officer of the Overseas Private Investment Corporation (Opic), has signed an agreement with Russia’s leading oil producer committing Opic toUS$130mn in financing for a project that will enable Russia to expand its oil export capacity in a cost-effective manner.

Connelly and Vagit Alekperov, president of OAO Lukoil, signed the agreement at the US-Russia Commercial Summit in St Petersburg, sponsored by the US Departments of Commerce and Energy and their Russian counterparts.

Opic will provide the loan guarantee to HBK Fund LP, a Delaware limited partnership based in Dallas, Texas, for a loan the fund will make to an indirect subsidiary of OAO Lukoil, Russia’s leading oil producer.

The project consists of the construction and operation of a crude oil and petroleum products export terminal on the western coast of Vysotsky Island on the Gulf of Finland, north of St Petersburg. Opic financing will specifically cover the first two phases of the project, including construction of rail links and upgrades, two tank farms and a marine jetty, as well as dredging in the Gulf of Finland to allow for the passage of crude and product tankers.

Connelly says: “Insufficient transportation and storage capacity for exportable oil products has been a significant problem for Russian producers such as OAO Lukoil. With the support of a US company, this project will enable OAO Lukoil both to expand its export volume and substantially reduce its average transportation costs.”

Opic’s board of directors approved financing for the project in July.

Since signing a bilateral agreement with Russia in 1992, Opic has committed more than US$3.6bn in financing and political risk insurance support to more than 110 projects in Russia in a variety of sectors.

OAO Lukoil has one of the largest petroleum reserve bases among private oil companies worldwide – nearly 17bn barrels of oil equivalent as of early 2002 – and is one of the largest crude oil producers in Russia.