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Overview

China Eximbank and Zhenhua Oil provide $1 billion oil prepayment facility to SNPC for general budget and short-term liquidity management purposes

Commitments (Constant USD, 2023)$1,286,138,473
Commitment Year•2010Country of Activity•CongoDirect Recipient Country of Incorporation•CongoSector•General Budget SupportFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Apr 27, 2010

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned companies

  • China Zhenhua Oil Co., Ltd.

State-owned Policy Banks

  • Export-Import Bank of China (China Eximbank)

Receiving agencies

State-owned companies

  • Société Nationales des Pétroles Congolais (SNPC)

Collateral providers

State-owned companies

  • Société Nationales des Pétroles Congolais (SNPC)

Loan description

China Eximbank and Zhenhua Oil provide $1 billion oil prepayment facility to SNPC for general budget and short-term liquidity management purposes

Interest type•Unknown

Collateral

Assignment of rights by the producer under an offtake contract, and a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited.

Narrative

Full Description

Project narrative

On April 27, 2010, the Société Nationale des Pétroles du Congo (SNPC) signed a $1,000,000,000 oil prepayment facility agreement — also known as a pre-export finance (PXF) facility agreement — with Zhenhua Oil Co. Ltd and China Eximbank for general budget and short-term liquidity management purposes. The borrowing terms of the loan are unknown.

Staff comments

1. Zhenhua Oil is the oil exploration and production subsidiary of China North Industries Group Corporation Limited (NORINCO), which is a Chinese state-owned defense contractor. The company was set up in 2003. 2. SNPC is the Congolese state-owned oil company. 3. A pre-export finance (PXF) facility is an arrangement in which a commodity (e.g. oil) producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed.