BAKU, Aug 4 (Reuters) - The European Bank for Reconstructionand Development (EBRD) has approved $500 million loan toRussia's second biggest oil producer, Lukoil, forparticipation in the development of Shah Deniz gas field inAzerbaijan, the bank said.
The credit is a half of $1 billion loan to be allocated toLukoil by the EBRD and the Asian Development Bank (ADB). TheEBRD and ADB were appointed by Lukoil as the mandated leadarrangers for the transaction, which is aimed at financing thecompany's 10 percent share in the project.
Around half of the loan amount is expected to be syndicatedunder the loan programmes of both the EBRD and the ADB.
The EBRD has already disbursed $380 million to Lukoil'ssubsidiary, Lukoil Overseas Shah Deniz Ltd (LSD), for thecompany's activity in the Shah Deniz project. The first tranchetotalled $180 million was allocated in 2005, while the secondtranche of $200 million was allocated in 2014.
Shah Deniz, Azerbaijan's biggest gas field, is beingdeveloped by BP, Azeri state energy firm SOCAR and othersand is estimated to contain 1.2 trillion cubic metres of gas.
The project will offer an alternative gas supplier forEurope as the continent tries to reduce its reliance on Russianenergy.
Shah Deniz I has been pumping gas since 2006 and has anannual production capacity of about 10 billion cubic metres(bcm) of natural gas.
Shah Deniz II is expected to produce 16 bcm of gas a yearfrom 2019-2020, with 10 bcm earmarked for Europe and 6 bcm forTurkey. (Reporting by Nailia Bagirova and Margarita Antidze; Editing byLouise Heavens)
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