ANNOUNCEMENT 24 Jun 2016In June 2016, the government of the Russian Federation announced a change in private-sector financial support.
NUMBER OF INTERVENTIONS
An official press report of State Corporation "Bank for Development and Foreign Economic Affairs (Vnesheconombank)" contains information concerning a guarantee at an amount that is equivalent to 3 billion US dollars. The guarantee was issued as a security to the obligation of OJSC NOVATEK to service the debt to creditors to its related company, OJSC Yamal LNG. The financial support is related to a project of strategic importance for the Russian economy concerning the construction of an integrated LNG complex in the Yamal peninsula.
Under its Memorandum on Financial Policies, Vnesheconombank extends credits, guarantees and assurances to projects with payback period of more than 5 years and a total value of more than 2 billion RUB. Vnesheconombank does not compete with commercial credit institutions. It intervenes only in projects with value added for the Russian economy that cannot receive funding from private investors. Therefore, Vnesheconombank's participation in the project by issuance of a guarantee helped OJSC Yamal LNG to receive international funding.
OJSC NOVATEK is Russia's largest gas producer and the second-largest natural gas producer in Russia. The company is engaged in the exploration, production, processing and marketing of natural gas and liquid hydrocarbons in the Yamal-Nenets Autonomous Region. It is the world's largest natural gas producing area and accounts for ca. 80% of the gas production in Russia and ca.16% of the world's gas production.
OJSC Yamal LNG implements a project on the construction of an LNG plant with capacity of 16.5 million tons per year in the South-Tambeyskoye field, planned to be put into operation in 2017.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
Abbreviation: OJSC means "open join stock company".