Exploration group Petroneft is to borrow up to US$5 million (€3.70 million) from Australian bank Macquarie to boost its operations in Russia.

The company said yesterday that Macquarie has agreed to provide it with a $5 million total debt facility. The Irish company intends to draw down $2 million of the funds immediately.

In return for this initial sum, it has provided the bank with warrants allowing it to subscribe for 4.7 million Petroneft shares at a price of 30 pence sterling (33.7 cent).

Petroneft has been debt-free up to this point. The company expects to begin producing oil from its licence 61 block, north of the Russian city of Tomsk, in the second half of this year.

Previous reports stating that the facility was $500 million were incorrect.