OAO Gazprom Neft is in the process of seeking a new loan worth nearly USD1 billion pegged at a lower interest rate compared to the one the Russian natural gas exporter had obtained previously. This move was confirmed by two individuals with knowledge of the transaction.

The company had offered to pay a margin of 150 basis points or 1.5% over the London interbank offered rate or LiBOR on the five year debt. This was confirmed by the sources who sought anonymity as the transaction remained private. This new interest rate offer is 25 basis points lower than on its USD700 million portion of a total of USD1 billion debt it had contracted last April, as confirmed by data collated by Bloomberg.

Gazprom Neft is now in the process of expanding its debt profile by as much as USD2.2 billion this year to provide it the financial flexibility to double its production to 100 million metric tons by 2020. This was confirmed by CFO Alexey Yankevich last December. He said, "It's a sin not to borrow with such a low debt load and good rates."

When sought for comment, the officials at the Moscow office of Gazprom Neft did not immediately return calls.