China Construction Bank (Europe) Warsaw Branch contributes to a zł5.5 billion PLN syndicated loan to OGP Gaz-System to fund its investment strategy including the Baltic Pipe Project and Świnoujście Polskie LNG Terminal (Linked to Record ID#106969)

Project narrative

In July 2020, a syndicate of 10 banks — including Bank of China (Luxembourg) S.A. Spółka Akcyjna Oddział w Polsce (BOC (Europe)) and China Construction Bank (Europe) S.A. (Spółka Akcyjna) Oddział w Polsce (CCB (Europe)) (Warsaw Branch) — entered into a zł5.5 billion PLN syndicated senior loan agreement into OGP Gaz-System S.A. — a Polish designated natural gas transmission system that owns and operates all gas transmission pipelines in Poland wholly-owned by the State Treasury of the Republic of Poland — to fund its investment strategy including the Baltic Pipe Project and Świnoujście Polskie LNG Terminal. The proceeds were to be used by the borrower to implement its 2020-2025 investment strategy and including the funding of two-way offshore gas Baltic Pipe Project and the Świnoujście Polskie LNG Terminal. Record ID#106969 captures BOC (Luxembourg)'s contribution. Record ID#106970 captures CCB (Europe)'s contribution. In addition to BOC and CCB contributed to the loan syndicate, the following lenders contributed to the loan syndicate: Alior Bank, Bank Gospodarstwa Krajowego, Bank Millennium, BNP Paribas Bank Polska, CaixaBank, Oddzial w Polsce, Credit Agricole Bank Polska S.A., mBank S.A., and Powszechna Kasa Oszczednosci Bank Polski. On October 31, 2022, the loan agreement was amended in connection with a new zł1.000 billion PLN ($210.77 million USD) subordinated loan from the Polish Development Fund to Gaz-System. The €2.1 billion EUR ($2.35 billion USD) Baltic Pipe Project sought to construct a two-way 600-kilometer long offshore gas pipeline to bring Norwegian fossil gas via Denmark to Poland traversing the Danish, Swedish, and Polish economic zones in the Baltic Sea with an annual capacity of 10 billion cubic meters annually. Specifically, the project involved the construction of an approximately 110 kilometer-long offshore gas pipeline from Norway’s pipeline Europipe II Gas Pipeline in the North Sea to a receiving terminal located North of Varde in Denmark; the construction of a new gas pipeline in the Danish transmission system approximately 210-230 kilometers long running between Egtved in Jutland and the southeastern part of Zealand, with a compressor station in the southeastern part of Zealand; an offshore gas pipeline approximately 260 to 310 kilometers long in the Baltic Sea between Denmark and Poland; and the expansion of the Polish gas transmission system onshore tying the Baltic Pipe into the Goleniów–Lwówek Gas Pipeline. Gaz-System owned a 50% stake and Danish state-owned electricity operator Energinet held the other 50%. In addition to the syndicated debt, the European Union provided a €214.9 million EUR grant from its Connecting Europe Facility for the project (in addition to earlier funding for a feasibility study and preparatory works). Contractors on the Baltic Pipe Project included Corinth Pipeworks to supply offshore linepipe, Saipem to lay the offshore pipeline, and DNV GL for independent verification services for the commissioning in the Danish section of the project. Ramboll Danmark A/S provided environmental supervision, while Brunel Energy Europe BV, Nova People AS, and Premier Technical Resources Ltd. were contracted to provide investor supervision and environmental supervision services during construction and installation works. In July 2020, activists from the Baltic Pipe Nej Tak campaign occupied one of the project's pre-construction sites, opposing the pipeline in specific because its nature as fossil fuel infrastructure. Construction began in 2020. The pipeline opened on September 17, 2022, but full construction and target transaction capacity was not reached until November 30, 2022. Świnoujście Polskie LNG Terminal is an LNG Terminal near Świnoujście, in Świnoujście County of West Pomeranian Voivodeship with a 5 billion cubic meter capacity that began operations in 2016. The plant sought to expand by 50% via a second berth and third storage tank to help wean Poland off of Russian gas imports. The expansion was done in two phases with an overall cost of €427 million EUR ($483 million USD). The first phase targeted a further capacity increase of 1.2 billion cubic meters per year and received a €130 million EUR ($157 million ISD) grant from the European Regional Development Fund which was criticized on environmental grounds for supporting fossil fuels; construction began in February 2021 and was completed in January 2022, raising annual capacity to 6.2 billion cubic meters annually. The second phase sought to increase capacity by 2.1 billion cubic meters per year and build a new storage tank and jetty. Construction began in February 2021 and was completed in December 2024. The expansion was criticized during its proposal and planning stage as being unnecessary and wasteful, as the terminal had not yet show its commercial viability as of 2019. Polskie LNG was responsible for the construction of the new LNG tank while Szczecin and Świnoujście Seaport Authority was responsible for construction of the hydrotechnical part of the berth and hydrotechnical infrastructure for the transmission pipe rack and complete mooring infrastructure.