Irish oil producer signs finance deal for €840,000

Petroneft will build winter road to ensure year-round production at its key Russian project

Irish oil and gas explorer Petroneft Resources has signed a deal which will provide it with up to $1 million (€840,000) to finance a road-building project at one of its key licences.

The company, which operates in the Tomsk Oblast, Russia, said heads of terms have been signed with Alexandrovskoye Oil in a move which will allow the company produce oil at its key licence all year round from 2021.

The funds will be used to finance the cost of building an all-season road to connect an important well with the local road network. Production at the well will recommence once the winter road is in place by the end of the first quarter of next year.

The quality of the road will ensure all-season access by trucks and rigs, removing seasonal barriers that are usual in west Siberia.

"The financing arrangement will enable us to establish year-round production from Licence 67 from the beginning of 2021, and also provides a secure buyer for our produced oil at competitive market rates. It may also have further value as we look at the potential of further development," said Petroneft chief executive David Sturt.

Under the initial agreement the parties have 30 days to complete the deal.