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. Last Updated: 07/27/2016

LUKoil Secures $1.5Bln To Develop Oil Reserves

LUKoil has appointed five Western banks to underwrite a $1.5 billion loan the oil giant will use to develop reserves in Russia's Far North and Caspian Sea regions.

The eight-year loan will be secured by oil export revenues and will be repayable over six years following a two-year grace period, LUKoil said in a statement.

ABN-AMRO Bank, Citibank, Credit Suisse First Boston, Deutsche Bank and Societe Generale are underwriting the loan.

"The project will play a key role in the development of long-term relationships with the energy finance community," LUKoil President Vagit Alekperov said in the statement.

"The fact that in conditions of a global financial crisis we managed to attract impressive investments at extremely advantageous terms is an indication of the growing trust of the international financial community in our company," he said.

LUKoil shares rose 4.87 percent Friday, just less than the 5.63 percent rise for The Moscow Times Index of 50 leading shares.

The oil holding would not reveal the terms of the loan, but the credit is the company's first long-term bank loan, representing a significant milestone in a market that has relied on equity or debt offerings for fast fund-raising.

"Given what is going on in the Russian market, this is good news," said Jim Henderson, an oil analyst with MFK-Renaissance.

The $1.5 billion provides one-fifth of the $7 billion in capital investments the oil major has said it needs by the year 2000. LUKoil in December boosted its oil reserves by almost 50 percent with the purchase of a 100 percent stake in the Caspian's Severny field and a 52 percent stake in Arkhangelskgeologodobycha.