(Alliance News) - PetroNeft Resources PLC on Monday said it has signed an offtake contract with Alexandrovskoye Oil Refinery that includes a USD1 million advance payment against future oil shipments from the C4 well on the Cheremshanskoye field in Russia.
Shares in PetroNeft were up 11% at 0.66 pence in London on Monday.
The Irish oil and gas exploration company that operates in Russia completed an extended test of the C4 well in October at the Cheremshanskoye field on Licence 67 earlier this year.
A heads of terms agreement was signed between the operator of Licence 67, LLC Lineynoye, which is 50% owned by PetroNeft, and AOR to finance the cost of building a 6.5 kilometres road to connect the C4 well with the local road network for up to RUB75 million, or USD1 million.
This road construction contract was awarded to Kedr LLC, a Tomsk, Russia-based construction company. PetroNeft said the advance payment under the contract will cover the entire costs of the road construction and will see production on the C4 well re-commence in early 2021.
Chief Executive David Sturt said: "It is exceptionally good news to be able to announce the successful signing of the offtake contract at the same time as awarding the road construction contract. In addition to providing funding for building crucial infrastructure on the Cheremshanskoye field, it also provides for the sale of the oil at very competitive market rates."
By Zoe Wickens; zoewickens@alliancenews.com
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