Japan Bank for International Cooperation (JBIC) has signed a US$522 million buyer's credit (export finance) agreement with Irkutsk Oil Company (INK) of Russia for the construction of a new petrochemicals plant in East Siberia.

The loan is co-financed with Deutsche Bank, Tokyo branch, acting as the facility agent, Société Générale, Tokyo branch, and Goldman Sachs Realty Japan, bringing the total amount to US$871 million. Nippon Export and Investment Insurance (NEXI) will provide insurance to the consortium of private financial institutions.   

The loan is provided to INK, which in turn will lend the funds to Irkutsk Polymer Plant, its wholly owned subsidiary. The financing will support the purchase of equipment from multiple vendors, with the main equipment for both the ethylene and polyethylene production facilities in the city of Ust-Kut, Irkutsk region in East Siberia, to be provided by Toyo Engineering Corporation.   

With the growing demand for chemicals such as ethylene and polyethylene in Russian and Asian markets, capital investment is expected to increase in Russia's petrochemical sector, JBIC says.

INK aims to use its sizable gas resources and diversify its business from the pure upstream oil production, on which the company has focused, to the downstream sector such as the production of plastic.

The loan will support Japanese companies involved in the export of the equipment and those in the Russian petrochemical sector, thereby helping improve the international competitiveness of Japanese industry, JBIC says.