EBRD EBRD Natural Resources Activities Natural Resources Activities

ECSEE Meeting, ZagrebECSEE Meeting, Zagreb

28 September 200428 September 2004

2

What is the EBRD?What is the EBRD?

International financial institution, owned by 60 countries and two inter-governmental institutions

Promotes transition to market-based economies in 27 countries from central Europe to central Asia

Capital base of € 20 billionCumulative commitments €

21.7 billion

0

6

12

18

24

'98 '99 '00 '01 '02 '03

3

Catalyst for changeCatalyst for change

EBRD investments have attracted an additional € 45.8 billion from domestic and foreign investors

The EBRD uses donor funding to assist project preparation and catalyse foreign investment

01020304050607080

'98 '99 '00 '01 '02 '03

MobilisedEBRD

Cumulative additional funds mobilised € 45.8 billion

4

How EBRD can assist How EBRD can assist industry playersindustry players

5

Strengths of the EBRD Strengths of the EBRD

Risk mitigation– Willing to share risks, including political risks

– Preferred Creditor Status in all countries of operation

– Excellent working relationships with governments

– Excellent working relationship with banks.

– Experience gained in problem resolution

6

Strengths of the EBRD (cont’d) Strengths of the EBRD (cont’d)

Deal Facilitation– Door opener for foreign private investors

– Strong, internationally recognised financial partner with long-term perspective and mission

– Nationals from our countries of operations are among the multi-national staff

– Extensive knowledge of local economy, business environment and practices

7

EBRD facilitiesEBRD facilities

LoansGuarantees Equity

All risk guarantees Specific risk

guarantees(e.g. political)

Commodity-backed instruments

Trade facilitation programme

Non/partial recourse to sponsors

Project specific Hard/local currency Medium and long term Floating/fixed rates

New equity Privatisation Quasi-equity

8

Funding GuidelinesFunding Guidelines

EBRD funds up to – 35% of total project costs for a greenfield project

– 35% of long-term capitalisation of an established corporate

Minimum amounts:– Usually minimum involvement of EBRD is €5 million

– Minimum financing size is €18 million

– Smaller financing requirements are met by financial intermediaries funded by EBRD

9

EBRD in the Natural EBRD in the Natural Resources sectorResources sector

10

EBRD Natural Resources portfolioEBRD Natural Resources portfolio

€1.7 billion committed to €10 billion projects

Future portfolio will be more diversified:– 60% oil / 40% gas

– 20% pipeline and downstream projects

– significant growth in “regional” projects involving several countries

11% 6%

69%

14%

Oil and Gas Extraction

Metal Ore

Mining

Pipeline Transportation

Petroleum Refineries

11

EBRD risk profileEBRD risk profile

EBRD Takes financial risks Takes political risks both

on sovereign and sub-national basis

Accepts long maturities Shares equity risk

Sponsors Bring strong management Assume construction risks Commit to sound environ-

mental practice

12

Examples of EBRD investmentsExamples of EBRD investments

EBRD’s relationships– Exxon-Mobil, BP Amoco, Shell, ConocoPhillips, LUKoil,

Gazprom-Rosneft, etc.

Project highlights– Russia: Sakhalin II, Polar Lights, LUKoil

– Caspian: AIOC/Chirag, Dragon Oil, Baku-Tbilisi-Ceyhan Pipeline, Shah-Deniz

– C&EE: Gastransit (Ukraine), SNP Petrom (Romania)

13

Romania: SNP PetromRomania: SNP Petrom

Project Details: Pre-privatisation transaction to support restructuring of

national oil and gas company in view of successful privatisation within an agreed timetable

Use of proceeds: modernisation of refining assets for total project of $150 million

EBRD Investment: $100 million EBRD senior loan EUR 40 million syndicated loan (A/B structure) $10 million co-financing BSTDB

Financing Structure: Lending based on strong cash flows Disbursements against specific milestones of

restructuring, privatisation and corporate governance Government acting in commercial capacity, as

performance guarantorLatest Developments:

EBRD Board has approved taking up to USD 73m in equity of SNOP Petrom alongside strategic investor

14

Ukraine: Balkan GastransitUkraine: Balkan GastransitProject Details:

Long term 2 Phase facility to support gas pipeline upgrade in Ukraine

Use of proceeds: construction of compressor station and parallel pipeline for total project cost of $190 million

Strong demonstration effect- only current international investment in Balkan gas pipeline project.

EBRD Investment: Phase I: $40 million EBRD 9 year senior loan and $ 12

million BSTDB parallel loan Phase II: $51 million 12-year EBRD senior loan, $ 6

million BSTDB facility and $ 40 million commercial Bank co-financing

Financing Structure: Security based on gas export contracts Revenues based on transportation and compression

payments Strong sponsor support (Gazprom, Naftogas Ukraine,

Transbalkan)

15

Project details Construction of facilities including use of off-shore platform for oil and gas production

off the Sakhalin coast Involvement of key sponsors: Shell, Mitsui, Mitsubishi Total Phase I investment: approx $ 1 billion Demonstration effect of successful use of PSA framework to potential Phase II project

involving LNG facilities and pipelines

EBRD investment US$116 million senior debt Parallel lending of $ 116 each from JBIC and USEXIM 10 year maturity with 3-year grace period

Financing Structure Appropriate completion obligations and debt servicing covenants Comprehensive security package

Russian Federation: Sakhalin IIRussian Federation: Sakhalin II

16

EBRD Transition Objectives, and EBRD Transition Objectives, and Support for gas market Support for gas market

development in the SEE regiondevelopment in the SEE region

17

EBRD Transition ObjectivesEBRD Transition Objectives

Policy dialogue for gradual gas market liberalisation in the Russian Federation (TC Study)

Advisory for oil & gas regulatory body in the Republic of Kazakhstan (AMA TC Study);

On-going policy dialogue with regional SEE Governments on prices liberalisation;

Co-operation with EU (DG-TEN); Pursuing LNG projects in Russia and new export routes

from Central Asia (including BTC and Nabucco projects);

18

European Oil & Gas networksEuropean Oil & Gas networks

19

European Gas SuppliesEuropean Gas Supplies

20

Forecast of Gas Supply – OECD EuropeForecast of Gas Supply – OECD Europe

0100200300400500600700800900

1000

1990 2000 2010 2020 2030

IndigenousproductionAfrica

Transition economies

Middle East

Other

21

Nabucco Gas Pipeline (proposed route)Nabucco Gas Pipeline (proposed route)

22

Contacting EBRDContacting EBRD

23

EBRD Natural Resources TeamEBRD Natural Resources Team

Bert van der Toorn, Deputy Director– Tel: +44 20 7338 7159

– Vandertb@ebrd.com