BP gets $50 million loan from IFC, EBRD

TIRANA, May 11 – International Finance Corporation IFC, a member of the World Bank Group, announced Monday it had agreed to support the further privatization of the Patos Marinza oilfield in southern Albania to help revive an outmoded industry and promote the reduction of pollution in the area.
IFC approved a US$50 million loan plus a special-purpose environmental-term loan of US$5 million to Bankers Petroleum Ltd, a Canadian oil and gas company. IFC may also make an equity investment of up to 12 million Canadian dollars. The European Bank for Reconstruction and Development (EBRD) is providing equal amounts.
Bankers Petroleum Ltd. announced it had finalized loan agreements with the IFC and the European Bank for Reconstruction and Development (EBRD) for the provision of reserve-based long-term financing of up to US$110 million to fund capital requirements and working capital needs for the Company’s projects in Albania.
The credit facilities consist of two six-year revolving facilities, aggregating US$50 million each to be used for the development of the Patos Marinza oil field and two eight-year term loans, aggregating to US$10 million, to fund environmental remediation of the oil field. All of the facilities will be funded equally between EBRD and IFC.
As part of the facility, Bankers has issued 16 million common share purchase warrants (8 million for each of IFC and EBRD), each warrant will entitle EBRD/IFC to purchase one common share of the Company at a price of $1.50 per common share which was priced at a 25% premium to market when this transaction was announced on February 25, 2009. The warrants will be exercisable when the Brent oil price stabilizes for 10 consecutive trading days above US$55 per barrel and until the earlier of, 1) one year from such date, or 2) 45 days after the date on which the Company has notified the lenders that its common shares have closed at or above the exercise price for 20 consecutive trading days.
Bankers Petroleum has been operating a small portion of the Patos Marinza oilfield since 2004. The current expansion of Bankers’ operation will modernize the oilfield, transferring specialized technical know-how and experience to a largely local workforce. This will contribute revenues to the Albanian government and help promote much-needed foreign direct investment in the country’s hydrocarbon sector.
“IFC’s financial support at this time of tight credit markets is vital to carrying out a large development project at Patos Marinza,” said Abby Badwi, CEO of Bankers Petroleum. “We particularly appreciate their expertise in helping us to involve other stakeholders in tackling the significant environmental remediation needs in the oilfield. In addition, this sizable long-term investment will allow our company continued access to competitive and sustainable financing arrangements to fund currently planned and future growth opportunities in Albania.”
Patos Marinza is severely polluted following decades of ownership by the state-owned operator Albpetrol. Bankers will clean up existing wells taken over from Albpetrol and help reduce pollution and oilfield-contamination risks as they expand their activities in the area.
“This project is a good example of how investing in the private sector can lead to tangible benefits for people on the ground,” said Somit Varma, IFC’s Global Head for Oil, Gas, Mining, and Chemicals. “While IFC provides financing to help improve recovery rates and accelerate domestic oil production, we also help the company to contribute to environmental remediation initiatives aimed at improving living conditions in the surrounding area.”
“With this project, the EBRD is providing much-needed long-term funding to support private investments in the Albanian oil sector. By investing to modernize in Bankers Petroleum’s operations, the Bank is helping to revamp the oil industry in Albania, by fostering further privatization and helping set high standards of environmental management”, said Paul Shapiro, the EBRD Operations Leader for the Project.
The United Nations Development Program has classified the Patos Marinza area as one of Albania’s pollution hotspots. As the clean-up takes a wider effort involving many more stakeholders than Bankers alone, IFC and EBRD have helped establish a multi-stakeholder working group to formulate environmental and social strategies and initiatives. IFC has engaged with Albanian ministries to secure their support and leadership on this initiative, as well as with the European Union to align ongoing initiatives.