RNS Number:4019X
Baltic Oil Terminals Plc
30 May 2007
Baltic Oil Terminals PLC
("Baltic" or the "Group")
CORPORATE UPDATE
KEY POINTS
Acquisition of interest in new oil transhipment terminal
* Baltic is very pleased to announce that it has entered into binding
heads of agreement to acquire for US$9 million (#4.5 million) a 25% interest in
Closed Joint Stock Company Rosbunker ("Rosbunker"), which has recently completed
the construction at Baltysk of the first phase of a new, state-of-the-art oil
transhipment terminal ("the Rosbunker Baltysk Terminal").
* The Rosbunker Baltysk Terminal, which commenced operations in March,
is already shipping significant volumes of oil-related products. It is supported
by extensive and modern infrastructure, including brand new pumping and storage
equipment and an exclusive railway line.
* Baltysk is a deep water port on the Baltic Sea itself and occupies a
highly strategic position, as it is located on the promontory between the Gulf
of Gdansk and Vislinskiy Zaliv, the channel of water that leads directly into
Kaliningrad.
* A second phase of construction will commence later this year, for
completion before the end of 2008, subject to certain approvals being provided
by the Federal Authorities, several of which have already been obtained. This
will considerably increase the capacity of the Rosbunker Baltysk Terminal,
making it the only transhipment terminal in the Kaliningrad Oblast able to
handle vessels of up to 40,000 DWT.
* 50% of Rosbunker is planned to be owned by a wholly owned subsidiary
of Krutrade AG, itself a wholly owned subsidiary of Kuzbassrazrezugol, which is
the largest Russian exporter of coal.
* Under the terms of the proposed shareholder agreement, which will be
under English law, Baltic will also assume overall supervision of the
construction of the second phase of the Rosbunker Baltysk Terminal.
* The heads of agreement also provide for Baltic to act as exclusive
sales and marketing agent of the Rosbunker Baltysk Terminal.
Update on CEPRUSS
* Baltic also announces that it has withdrawn its offer to acquire an
interest of 76% in CEPRUSS, following submission of new terms by the vendors,
including an increase in the price, and the disclosure, very recently, of
increased operating costs within CEPRUSS.
* However, Baltic remains interested in acquiring a shareholding in
CEPRUSS, but only in appropriate circumstances, and will continue to monitor the
situation.
Other Operations
* In April 2007, Baltic recommenced construction of its Tetoil-Baltic
transhipment terminal project on the Rybachiy peninsula in Kaliningrad, which is
now expected to start shipping in September 2007. In addition to providing
further information on this and the Rosbunker Baltysk Terminal, the statement
below also contains an update on the drilling of the 2,000m correlation well at
Privolny in Kurgan, which has now reached a depth of over 1100m.
Outlook
* As a result of the initiatives announced today and upon completion of
the Rosbunker acquisition, the Directors expect that Baltic will benefit from a
significant scaling up of transhipment volumes, both in its current financial
year and for several years thereafter and will also benefit from increased
cashflows.
Finance
* The Directors intend to finance the consideration for the acquisition
of the interest in Rosbunker and Baltic's share of the phase 2 capital
expenditure, together with the costs of the Rybachiy development and the
Zauralneftegaz drilling programme, all as described in this announcement, from
the Group's resources.
30 May 2007
Simon Escott, Chief Executive of Baltic, commented:
"Acquiring a stake in the Rosbunker Baltysk Terminal not only plays to our
strength as an experienced oil terminal operator, but also provides us with
significant transhipment volumes immediately. This more than makes up for not
being able to complete the CEPRUSS acquisition, which it is now clear was not in
shareholders' interests on the revised terms offered. We are now far better
positioned, both financially and operationally, to implement our plans for
growth and deliver long term shareholder value."
Enquiries
Baltic Oil Terminals plc
Simon Escott +44(0) 207 667 6371
Pelham PR
Archie Berens +44(0) 207 743 6679
Evgeniy Chuikov +44(0) 203 008 5506
Baltic Oil Terminals PLC
("Baltic" or the "Group")
Corporate Update
Baltic Oil Terminals PLC (AIM: BTC), the owner and operator of oil terminals in
Kaliningrad and with significant interests in exploration assets in the Kurgan
region of Western Siberia, Russia, issues the following corporate and trading
update.
CEPRUSS
Baltic announced on 5 February 2007 that it was in advanced negotiations to
acquire an interest of 76 per cent. of Joint Venture Closed Stock Company
CEPRUSS ("CEPRUSS"), owners of a port and potential terminal site in
Kaliningrad.
On 16 May 2007, Baltic believed that it had reached agreement with the vendors
of CEPRUSS on terms acceptable to Baltic. On the next day, however, the vendors
subsequently withdrew these terms and replaced them with alternative terms,
which included an increase in the price and the disclosure of increased
operating costs within CEPRUSS. It was not possible to negotiate satisfactory
terms.
As a result, on 29 May 2007, the Board withdrew Baltic's offer for the interest
in CEPRUSS. Baltic would however be interested in acquiring an interest in
CEPRUSS, but only in circumstances where the Board could be entirely satisfied
that the terms offered were acceptable.
Closed Joint Stock Company Rosbunker ("Rosbunker")
The Group has today entered into a binding letter of intent with two companies
(the "Vendors") controlled by Vladimir Gavrilov, a Moscow based lawyer and
businessman with various interests in natural resources. The letter of intent
provides for Baltic to acquire from the Vendors a 25 per cent interest in
Rosbunker for US $9.0 million (#4.5 million) payable in cash on completion. The
Board intends that an English law sale and purchase agreement will be entered
into shortly.
In addition to the binding heads of agreement, Baltic and the Vendors have
entered into a memorandum of understanding with a wholly owned subsidiary of
Krutrade AG, a natural resources trading company, under which the latter would
also acquire from the Vendors a 50 per cent interest in Rosbunker. Krutrade AG,
which is incorporated in Austria, is a wholly owned subsidiary of
Kuzbassrazrezugol, the largest Russian exporter of coal. It is intended that
each of the shareholders of Rosbunker will then enter into an English law
shareholder agreement.
Rosbunker has recently completed the first phase of construction of a new,
state-of-the-art oil transhipment terminal at the port of Baltysk, which is
located at the mouth of the Pregol River, in the Kaliningrad Oblast, on a site
which has just been leased from the Federal Authorities.
Baltysk is a deep water port on the Baltic Sea itself, thus allowing vessels of
up to 40,000 DWT to load and unload cargo. Moreover, Baltysk occupies a highly
strategic position, as it is located on the promontory between the Gulf of
Gdansk and Vislinskiy Zaliv, the channel of water that leads directly into
Kaliningrad.
The Rosbunker Baltysk Terminal is supported by extensive and modern
infrastructure, including brand new pumping and storage equipment and an
exclusive railway line. The terminal is equipped with new unloading racks, a
steam generation plant, heat exchangers and storage pumping and loading
facilities. It is capable of storing Mazut, gasoil and vacuum gasoil, and
currently has a capacity of 34,000 m(3). The terminal is also equipped with
blending and bunkering facilities.
In addition, it has two new railway tanker unloading racks, which can handle 24
railcars on two levels, and is located under 1 kilometre from the local Russian
railway marshalling yard. The terminal's jetty, which is connected by an
elevated, insulated pipeline to the tanks, is capable of handling vessels with a
draft of up to approximately 14,000 DWT, and has permission to accept foreign
flag vessels.
The first phase of the construction was completed and transhipments commenced in
March 2007. Transhipments increased to just under 100,000 tonnes per month ("
tpm") in May and are expected to reach similar levels in June 2007.
Following the scaling up of transhipments, Rosbunker is now in final
negotiations to secure an adjacent 8 acre plot under a new lease from the same
Federal authorities. Rosbunker intends, as phase 2 of the project, to construct
a further 75,000m(3) of product storage on this site, which is adjacent to a
deep water mooring facility, capable of handling vessels up to 40,000 DWT with a
draft of 14m, a size of commercial vessel currently unable to berth anywhere
else in the Kaliningrad Oblast. It is expected that construction of the second
phase of Rosbunker will commence later this year, for completion by the end of
2008, subject to certain approvals being provided by the Federal Authorities,
several of which have already been obtained. This would increase the capacity of
the terminal by approximately 400,000 tpm. Under the terms of the agreement,
Baltic will assume overall supervision of the construction of the second phase
of the Rosbunker Baltysk Terminal.
The binding heads of agreement and the memorandum of understanding also provide
for Baltic to provide sales and marketing services on behalf of Rosbunker.
A further announcement will be made upon execution of the Sale & Purchase and
Shareholder Agreements.
Tetoil Baltic Rybachiy
On 5 February 2007, Baltic had also announced that, by reason of the operational
infrastructure of CEPRUSS which it had expected would enable an immediate start
up of transhipment operations and construction of a new terminal, it had
prioritised the proposed development of the CEPRUSS site ahead of the
development of the first phase of the Tetoil terminal of the Rybachiy peninsula.
However, given the delays which were being experienced in the acquisition of the
interest in CEPRUSS, Baltic re-commenced construction of the Rybachiy terminal
in March 2007, and the Directors now anticipate transhipment commencing at the
terminal in September 2007. They further anticipate that transhipment capacity
will reach 240,000 tpm by December 2008.
Four tanks are already on site, with a capacity of 14,000 m(3). A further two
tanks with a capacity of 11,000 m(3) each are ready for immediate delivery from
the manufacturer, giving a total tank capacity of 36,000 m(3).
TDKN
The Group has today increased its interest in TDKN from 51 per cent. to 65 per
cent., at a cost of US$20,000, through the purchase of the smallest partner's
shareholding of 14 per cent. in TDKN.
The Board now believes that, with co-operation from the Navy having now been
restored, the terminal currently has capacity for 100,000 tpm, which could be
increased by a further 100,000 tpm upon the installation of a further tank,
following Naval approval.
Zauralneftegaz
Over 1100m of the 2,000m correlation well at Privolny has now been drilled on
behalf of Zauralneftegaz.
The Directors anticipate that the preliminary analysis of the drilling will be
released by July 2007 following which they will select the remaining locations
of the three well programme.
Finance
The Directors intend to finance the consideration for the acquisition of the
interest in Rosbunker and Baltic's share of the phase 2 capital expenditure,
together with the costs of the Rybachiy development and the Zauralneftegaz
drilling programme, all as described in this announcement, from the Group's
resources.
Outlook
As a result of the initiatives announced today and upon completion of the
Rosbunker acquisition, the Directors expect that Baltic will benefit from a
significant scaling up of transhipment volumes, both in its current financial
year and for several years thereafter and will therefore benefit from increased
cashflows.
Preliminary results
The Directors intend to release the preliminary results of the Group for the
year ended 31 December 2006 shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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