Bank of China contributes $356.91 million USD to a $7.02441 billion USD syndicated loan for the Port Arthur LNG Phase 1 Project (Linked to Record ID#106063)

Project narrative

On May 18, 2023, financial close was reached on a deal in which a syndicate of 37 banks — including the Bank of China (BOC) and the Industrial and Commercial Bank of China (ICBC) — entered into a $7.02441 billion USD syndicated loan agreement with Port Arthur LNG, LLC (PALNG) — a Delaware-incorporated special purpose vehicle (SPV) wholly owned by Port Arthur Liquefaction Holdings, LLC, a Delaware-incorporated SPV jointly owned by ConocoPhillips Port Arthur LNG LLC (30% equity stake), a Delaware-incorporated wholly-owned subsidiary of ConocoPhillips Company, and by Sempra PALNG Holdings, LLC (70% equity stake), a Delaware-incorporated SPV wholly-owned by Sempra LNG Holding, LP, a Delaware-incorporated company wholly-owned by Sempra Global Holdings, LP, a Delaware-incorporated company wholly-owned by Sempra Infrastructure Partners, LP, a Delaware-incorporated energy company jointly owned by KKR Pinnacle Investor L.P. (20% stake), a Delaware-incorporated wholly-owned subsidiary of KKR Pinnacle Investor Midco L.P., a Delaware-incorporated wholly owned subsidiary of KKR Pinnacle Investor Parent L.P., a Delaware-incorporated subsidiary of KKR Pinnacle S.á r.l, a Luxembourg-incorporated of KKR Pinnacle Aggregator L.P., a Delaware-incorporated subsidiary of KKR & Co. Inc., by Sempra Energy, a California-incorporated energy infrastructure company listed on the New York Stock Exchange (NYSE) (70% stake), and by a subsidiary of sovereign fund wealth Abu Dhabi Investment Authority (ADIA) (10% stake) — for the Port Arthur LNG Phase 1 Project. This loan consisted of a $6.8 billion USD term loan tranche and a $200 million USD working capital facility tranche. It carried a maturity period of seven years with a 20-year sculpted amortization profile beginning in the first full quarter after project completion and an interest rate of SOFR plus a margin of 200 basis points (bps) during construction and 225 bps thereafter and included upfront fees. Interest rates were required to be hedged or have fixed interest rates for a minimum of 60% of the projected amount of term loans outstanding. BOC contributed $356.91 million USD and ICBC contributed $200.00 million USD to the loan syndicate. Record ID#106062 captures BOC's contribution. Record ID#106063 captures ICBC's contribution. In addition to BOC and ICBC, the following lenders contributed the respective amounts to the loan syndicate: Aozora Bank ($10.00 million USD), Apple Bank ($50.00 million USD), Bank of America Corporation ($300.15 million USD), Bayerische Landesbank (BayernLB) ($200.00 million USD), Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) ($300.15 million USD), CaixaBank, S.A. ($300.15 million USD), Canadian Imperial Bank of Commerce (CIBC) ($300.15 million USD), Citigroup ($300.15 million USD), Crédit Agricole Group ($300.15 million USD), DZ Bank AG ($50.00 million USD), First-Citizens Bank & Trust Company (First Citizens Bank) ($25.00 million USD), First Commercial Bank Limited ($25.00 million USD), FirstBank Puerto Rico ($20.00 million USD), Landesbank Hessen-Thüringen (Helaba) ($75.00 million USD), ING Bank N.V. ($300.15 million USD), The Iyo Bank, Ltd. ($20.00 million USD), JPMorgan Chase Bank, N.A. ($300.15 million USD), KEB Hana Bank ($30.00 million USD), KfW IPEX-Bank GmbH ($300.15 million USD), Korea Development Bank (KDB) ($200.00 million USD), Royal Bank of Canada (RBC) ($300.15 million USD), Banco Santander, S.A. ($300.15 million USD), the Bank of Nova Scotia (Scotiabank) ($300.15 million USD), Shinhan Bank ($100.00 million USD), Siemens Financial Services GmbH ($50.00 million USD), Standard Chartered Bank PLC ($300.15 million USD), Sumitomo Mitsui Banking Corporation (SMBC) ($300.15 million USD), Taiwan Cooperative Bank ($15.00 million USD), Wells Fargo Bank N.A. ($300.15 million USD), and Woori Bank ($45.00 million USD). Mizuho Bank served as lead arranger and administrative agent. BOC, BBVA, Banco Santander, Bank of America, Mizuho, and RBC served as agents. ICBC, Crédit Agricole, BayernLB, CaixaBank, CIBC, Citigroup, ING, JPMorgan, KfW, MUFG, National Bank of Canada, Standard Chartered Bank, SMBC, Scotiabank, and Wells Fargo served as additional lead banks. The proceeds were to be used by the borrower to finance the Port Arthur LNG Phase 1 Project, which sought to construct a natural gas liquefaction and export terminal in Port Arthur, Jefferson County, Texas with two natural gas liquefaction trains with a nameplate capacity of approximately 13 million tons per annum (Mtpa), two liquefied natural gas (LNG) storage tanks, marine facilities, including a marine berth for LNG vessel berthing and loading, natural gas liquids and refrigerant storage, feed gas pre-treatment facilities, and truck loading and unloading areas. The facility had direct access to the Gulf of Mexico via the Sabine-Neches ship channel. The project was expected to help facilitate the energy transition from heavier fossil fuels to less carbon emissive energy and to improve the security of U.S. LNG energy supply. Phase 2, at the same site, was intended to increase total capacity to 26 Mtpa with further storage and berth space. The project had a total cost of about $13 billion ISD. The sponsors provided $4.700 billion USD in equity, with ConocoPhillips contributing $1.410 billion USD. The long-term capacity of the Port Arthur LNG Phase 1 was contracted to ConocoPhillips, RWE Supply and Trading, PKN ORLEN S.A., INEOS and ENGIE S.A.. Bechtel Energy, Inc. served as engineering, procurement, and construction (EPC) contractor. Port Arthur LNG Phase 1, which is currently under construction, represents a $13 billion investment in new energy infrastructure in Texas that will stimulate local, regional, and national economies by creating U.S. jobs, supporting small businesses and strengthening the U.S. natural gas sector’s leadership position as a reliable partner in building energy security worldwide. In August 2015, the U.S. Department of Energy issued approval to export LNG to Free Trade Agreements (FTA) countries. In April 2019, the U.S. Federal Energy Regulatory Commission (FERC) approved Phase 1. In May 2019, approval was given to export LNG to countries that do not have a free trade agreement. In May 2019, Saudi Aramco entered into a preliminary agreement to acquire a 25% stake in the project. Final investment decision, originally planned for 2020, was delayed to 2021 in 2020, and then later delayed in 2022 in 2021. Saudi Aramco's preliminary involvement expired in June 2021, and a supply and purchase agreement with Polish Oil & Gas Company agreed in December 2018 was terminated. In August 2022, the sponsors requested an extension from FERB to construct the project through June 2028, which was granted in October 2022. Final investment decision (FID) for the project was announced on March 20, 2023 with Sempra and ConocoPhillips announcing an agreement to sell an indirect, non-controlling interest to KKR and a final notice to proceed granted to Bechtel Energy the same date. In April 2023, the U.S. Department of Energy announced that would it approve a request by the sponsors to extend the start date of the project to 2028. In September 2023, KKR acquired a 42% stake in the project, with Sempra retaining a 28% controlling interest. Train 1 was expected to have its commercial operations for 2027. Train 2 was expected to have its commercial operations for 2028. Site preparation began shortly after the final investment decision. The official ground-breaking ceremony was held on March 15, 2024. In August 2021, a local community group, Port Arthur Community Action Network, Texas Commission on Environmental Quality (TCEQ) over Sempra's request for air emission permits for phase 2 of the project. In August 2021, it gained another hearing after TCEQ officials asked to learn about their concerns. In November 2023, the U.S. Court of Appeals for the Fifth Circuit revoked the emissions permit for Port Arthur LNG for its alleged failure to impose the same emissions limits as other LNG projects after a lawsuit from the Port Arthur Community Action Network. Construction proceeded.