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. Last Updated: 07/27/2016

ING Firm to Spend $90M on 10 Tankers

SAMARA, Volga River Valley — ING Barings subsidiary Burren Energy plans to build 10 tankers in Russia for its BEST-Samara subsidiary, the director of BEST-Samara said.

The $90 million needed for the grandiose project will be provided by a group of Western banks headed by the European Bank for Reconstruction and Development.

BEST-Samara director Dmitry Butakov said last week that the owners of the company had decided to set up their own fleet to operate on Volga and Caspian routes.

BEST-Samara currently subleases about 16 vessels from the Samara-based company Volgotanker, in which ING holds a stake of about 13 percent.

Butakov said the project provides for the construction of 10 tankers, four of which are to be started this year and completed by the beginning of 2003.

The first four ships will have load capacities of 8,000 metric tons and 5,000 metric tons and cost $38 million.

Russian banks Vneshekonombank and Alfa Bank will draw up the pledge agreements under the credit.

The tankers will be used as collateral.

An EBRD source confirmed that negotiations are under way for the credit but declined to stipulate the amount.

The EBRD owns shares in Burren Energy via several regional funds and is a minority shareholder, the source said.

In December, Burren Energy instructed the Vimpel commercial bank based in Nizhny Novgorod to develop project documentation for the construction of the first two 5,000-ton capacity tankers.

The construction contract is expected to be awarded to one of a handful of shipbuilders that includes the Volgograd Shipbuilding Factory, Krasny Sormov in Nizhny Novgorod, the Oksky Shipbuilding Factory in the Nizhny Novgorod region and the St. Petersburg-based Severnoy Verf.

A final decision on the winning shipbuilder should be announced by the end of January.

BEST-Samara management said the cost of the 8,000-ton capacity tankers could be recouped after seven to eight years.

The 5,000-ton capacity vessels would pay for themselves after nine to 10 years. The larger tankers would work the Caspian sea route shipping from Aktau in Kazakhstan and Turkmenistan, while the smaller vessels would work the Caspian-Black Sea route.

At the same time, Burren Energy is hoping to attract about $10 million to $15 million to refit a transshipment port on the Black Sea — most likely the port Kavkaz in the Kerchensk Gulf.

Then the company will be able to guarantee year-round transshipment of Kazakh and Turkmen oil through Astrakhan by rail to the Black Sea and onward.

The source of financing for this project has yet to be decided.

Burren Energy began working on the transshipment market in 1995, transporting crude oil and oil products that belonged to third parties including the companies Chevron and Larmag.

From 1998, Burren teamed up with partners Monument (now LASMO) and Mobil (now ExxonMobil) to participate in joint operations in connection with the transportation and sale of its own crude extracted under concession agreement at the Nebit Dag deposit in Turkmenistan.

Burren became the owner of the concession in August 2000.

Throughout 1999, the total volume of shipments and transshipments totaled more than 300,000 tons.

The lease of 16 tankers from the Volgo tanker company increased the volume of shipments in 2000 to more than 1.143 million tons.

In addition to Turkmenistan, Burren extracts oil in the Saratov and Rostov regions.