Prax Group, the owner of the U.K.'s 110,000-b/d Lindsey oil refinery, agreed the terms of a $40 million credit facility with the now-sanctioned Gazprombank a week before Russia invaded Ukraine, OPIS has learned.

The security deed for the agreement between Prax Petroleum Limited and Russian bank Gazprombank's Swiss office is dated February 16, according to the U.K.-registered company's filings, just eight days before Russia invaded Ukraine and following several weeks in which U.S. and British intelligence agencies warned that Russia was planning an invasion.

The British government announced sanctions on Gazprombank on March 24, initially giving its U.K. counterparties until April 23 to wind down agreements with the bank, as part of efforts to punish Russia for its invasion of Ukraine. The government later issued a later deadline date for natural gas importers.

Uncommitted credit facilities are often used for temporary purposes in financing the short-term needs of a borrowing company. OPIS asked Prax several questions related to the facility, including whether it had been used.

In a statement, a spokesperson for Prax said Wednesday: "The Prax Group has many facilities with international banks, as you would expect for a group of our size, and we ensure that we are always fully compliant with all government sanctions."

Prax Group’s credit facility with Gazprombank was agreed just a few days after the company shelved a $250 million bond sale, which could not be concluded despite Prax Group offering investors an 11 per cent yield, according to Bloomberg. The company did not reply to OPIS questions related to the proposed bond issue.

Prax Group signed a $750 million securitization facility with HSBC, Citibank, JPMorgan Chase and Royal Bank of Canada in March last year, when it completed its purchase of the Lindsey oil refinery on the English east coast from French major TotalEnergies.

OPIS posed a series of questions to the U.K. government's Department for Business, Energy and Industrial Strategy (BEIS) related to the government's knowledge of the Gazprombank credit facility negotiations and conclusion. The department is home to a 'downstream oil resilience' team of civil servants tasked with monitoring the operations of the country's oil refineries. BEIS forwarded the questions to Her Majesty's Treasury, the U.K.'s finance ministry, which had not replied by the time of publishing.

Prax Group, whose parent company is State Oil, operates Harvest Energy, which supplies fuels to a network of more than 150 service stations in the U.K. Prax signed an exclusivity agreement with oil trader Trafigura in March last year when it took over the Lindsey refinery from TotalEnergies. Under the terms of the agreement, Trafigura is the sole provider of crude and refinery feedstocks to the refinery.

Investigative journalist group Source Material reported March 27 that Trafigura's shipments of Russian crude remained at pre-war levels, with the trader loading approximately 8 million barrels of crude from four Russian ports over March. Trafigura said in response that its overall trading volume with Russia, including oil products as well as crude had fallen in March. The company added that it was compliant with all sanctions on Russia.

Trafigura repeated those comments to OPIS on Thursday. A spokeswoman for the company added: "We have legal obligations under pre-existing term offtake agreements for oil and oil products entered into prior to the war in Ukraine...We announced this week that we are ceasing all purchases of crude oil from Rosneft in advance of May 15."

The Lindsey oil refinery will have significant capital outlays over the next year, with the plant undertaking a long-planned full-scale turnaround in the second quarter of 2023.

--Reporting by Anthony Lane, alane@opisnet.com
--Editing by Rob Sheridan, rsheridan@opisnet.com

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