Summary of Proposed Investment
Project Number
8902
Company Name
CJSC Bitech-Silur Company
Date SPI Disclosed
Sep 14, 1998
Country
Russian Federation
Industry
Metals and Mining
Status
Completed
Sector
Oil and Gas Production (Includes Development)
Department
Gbl Infrastructure & Natural Resources
Environmental Category
B - Limited
Previous Events
Approved : Mar 12, 1999
Signed : Jun 30, 1999
Invested : Jul 30, 1999
Project Description
Summary Of Project Information (SPI)
| Project Name | Russian Federation: Bitech Silur |
| Region | Europe |
| Sector |
Projected Board DateOctober 14, 1998
Company NameBitech-Silur JSC or "Bitech"
Technical Partner and/or Major Shareholders
Bitech is wholly owned by Bitech Petroleum Corporation (BPC), a company listed on the Toronto Stock Exchange.
Project Cost Including proposed IFC investment
Total Project cost is estimated at US$79 million. IFC''s investment would consist of an A-Loan of US$25 million and an equity investment of up to US$5 million equivalent in BPC''s capital.
Location of project and Description of site
Bitech’s operational base is in Pechora, in the Komi Republic of Russia. Pechora has a relatively well-developed oil infrastructure and a variety of small, as yet undeveloped, oil fields.
Description of Company and Purpose of Project
Bitech is a Russian joint stock company, which was established in 1994. It has licenses pertaining to three main oil fields, namely South Kyrtayel, Lekker and Subor, with combined proven reserves of about 45 million barrels. Bitech started producing from South Kyrtayel in 1995 and posted its first net income in the third quarter of 1997.
The Project involves the full development of the South Kyrtayel and Lekker fields and includes drilling and gas re-injection facilities. It also includes an extended well test and seismic studies on Subor, which is adjacent to the Lekker field and is a non-producing heavy oil field. The Project is expected to result in a peak production of about 18,500 barrels per day and recovery of up to 45 million barrels of crude oil. Implementation is well underway and is expected to take three years.
IFC''s main role is to complete the financing plan by providing long term funding, which is not readily available for relatively small and independent Russian companies. IFC’s presence and financing will also help to mitigate the perceived political risk of investing in Russia for BPC, and encourage it to expand and strengthen its Russian operations as well as support its plans to establish joint ventures with other Russian and foreign oil companies. In this way, IFC will be supporting private sector led hydrocarbons development in Russia. Finally, IFC will ensure that the project meets the World Bank environmental guidelines.
The project is expected to have a strong developmental impact by supporting Russia’s oil sector, which is a key sector for the country and which continues to suffer from severe under-investment. The lack of investment in Komi has created significant economic hardship in its oil producing communities. The project will generate additional tax revenues for the central and local governments, and benefit Russia’s balance of payments. Bitech’s control of field operations combined with its policy of employing only Russian staff, will help transfer western oil production technology to Russia. Finally, the project would have a positive demonstration impact for foreign oil companies, willing to invest in Russia, but wary of its very uncertain investment climate.
Environmental Category and Issues
This is a category B project according to IFC''s environmental review procedure. The full development of the South Kyrtayel and first phase of Lekker field will be accomplished using existing well pads, field roads and pipelines. At the Subor field the project includes seismic and a test well. The project includes the remediation of existing contamination at the two well pads at South Kyrtayel. Produced gas currently being flared will be reinjected to support an enhanced oil recovery program. The project includes an emergency response plan including an oil spill contingency plan. The project responds to requests for humanitarian causes and is committed to helping its neighbouring communities. While gulag labor has been used in the past at the request of the camp commander for useful work for prisoners, the sponsor has decided not to do so in the future.
At IFC''s request, the sponsor will give a written undertaking to that effect and commit to referring to IFC for approval if it wishes to respond positively to any similar future request.
The project has all the required environmental permits granted on the basis of separate Environmental Impact Assessment Reports prepared in accordance with Komi Republic requirements.
The project fully complies with applicable World Bank safeguard policies and environmental, health and safety guidelines
The is from the Infoshop.
| Date SPI sent to PIC | September 14, 1998 |
“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”
For Additional Information contact: Corporate Relations Unit -
telephone: (202) 473-7711
facsimile: (202) 974-4384
Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).
Sponsor / Cost / Location
Related ESRS/ERS
