China Eximbank provides $1.13 billion buyer’s credit for the KazMunayGas Atyrau Oil Refinery Construction Project (Linked to Project ID#54798, #54797 and #85185)

On December 29, 2011, Atyrau Refinery LLP — a project company and subsidiary of Kazakh state-owned KazMunayGas — signed an EPC turnkey contract for the KazMunayGas Atyrau Refinery Project (also known as the Advanced Oil Refining Complex Construction Project and the Deeper Oil Conversion Complex Construction Project) with a consortium of contractors consisting of Sinopec Engineering Group (SEG), Marubeni Corporation, and JSC OGCC KazStroyService. SEG was the leader of the consortium; Marubeni Corporation participated in the logistics and procurement, as well as organizing financing from the Japan Bank for International Cooperation, while JSC OGCC KazStroyService participated in construction and local procurement under SEG's leadership. Then, on June 6, 2012, Atyrau Refinery LLP entered into a $1,130,408,642 buyer’s credit loan (BCL) agreement (#BLA201201) with the Export-Import Bank of China for the Construction of Advanced Oil Refining Center at the Atyrau Refinery, as captured via Project ID#39556. The BCL bears interest at a rate of six-month LIBOR plus 4.1% per annum and matures on November 6, 2025. China Export & Credit Insurance Corporation (Sinosure) provided $1.7 billion USD of buyer’s credit insurance (covering the loan loan principal and interest). The BCL received an official guarantee from the Government of Kazakhstan’s Ministry of Finance. JSC NC “KazMunayGas” also provided a guarantee for the loan. As of December 31, 2017, the outstanding principal amount under this loan was $1.1 billion. Atyrau Refinery LLP fully repaid the loan -- through a $604 milllion prepayment -- ahead of schedule in January 2022. Then, on October 15, 2012, the Development Bank of Kazakhstan JSC (DBK) entered into a $199.5 million preferential buyer’s credit (PBC) loan agreement with the Export-Import Bank of China for the Construction of Advanced Oil Refining Center at the Atyrau Refinery, as captured via Project ID#54798. The PBC's maturity date was October 15, 2025, and it carried an interest rate of 3% per annum. This loan agreement was amended on October 30, 2014; however, the terms of the revision are unknown. Nor is it clear if DBK on-lent the proceeds of the PBC loan to Atyrau Refinery LLP. As of June 30, 2017, the aggregate principal amount outstanding under the PBC loan was $179.5 million. The total cost of the KazMunayGas Atyrau Refinery Project was $1,679,892,000.52. It was also financed by a $251,983,878 loan dated on August 17, 2012 (№DBZI 241-E / 05-01) from the Development Bank of Kazakhstan JSC, a $297,500,000 loan dated August 8, 2012 from the Japan Bank for International Cooperation (JBIC), and three loans dated July 27, 2012, November 13, 2012, and December 29, 2012 that collectively amounted to ₸20,790,000 KZT from JSC KazMunayGaz - Refining and Marketing. The loans also covered commissions for arranging loans and insurance premia. The loans from Eximbank, JBIC (which may have involved the Bank of Tokyo Mitsubishi UFJ, Ltd.), and DBK were all guaranteed by JSC NC “KazMunayGas”. Sinopec subsidiary Sinopec Luoyang Engineering Co., Ltd. was involved in the implementation of the project. Atyrau Refinery is one of the largest refineries in Kazakhstan and in 2011 refined 100,000 bbl of crude oil every day. The project sought to increase the productivity of Atyrau Refinery to 5.5 million tons per year and oil refining efficiency to 87%, gaining the yield of motor fuel up to 77%, corresponding to the international standards of Euro-4 and Euro-5. The project included the construction of 12 individual process units, a main facility with a catalytic cracking unit, designed for the conversion by delayed coking of the atmospheric distillation residues, heavy gas oil, vacuum gas oil and heavy gas oil into liquified petroleum gas, gasoline, and light cracking gas oil. The complex was set to include LPG desulfurization facilities, oligomerization, a naphtha hydro-treating unit, a gasoline and gas oil catalytic cracking unit, hydrogen production, isomerization units, etc. The project's groundbreaking ceremony was held on September 10, 2012. It was expected that the implementation period would be 41 months (41 months from the groundbreaking ceremony was February 2016) and that construction would be completed in 2016. The turnkey project was formally handed over to the project owner on May 30, 2019. Then, in January 2020, Atyrau Refinery LLP received a long-term, tenge-denominated loan worth 46 billion tenge from DBK to refinance its loan from China Eximbank for the KazMunayGas Atyrau Oil Refinery Construction Project.

Additional details

1. The average 6-month LIBOR in June 2012 was 0.736%. Therefore, the all-in interest rate was coded as 0.736% + 4.1%, or 4.836%. 2. The Chinese project title is 哈萨克斯坦阿特劳炼油厂石油项目. 3. AidData suspects that the PBC captured via Project ID#54798 partially financed DBK's earlier $251,983,878 USD loan dated on August 17, 2012 (№DBZI 241-E / 05-01); while the PBC came two months after this loan, DBK may have issued it knowing that China Eximbank would soon provide finance. If this is the case, it would explain why the project cost was reported as $1,679,892,000.52 despite the existence of this loan, which would have otherwise substantially increased the amount of financing. However, as stated earlier, it is unclear if this PBC was used by DBK to on-lend; this is merely informed speculation. 4. The $1.13 billion China Eximbank BCL to Atyrau Refinery LLP for the Deeper Oil Conversion Complex Construction Project is separate from the $884 million USD China Eximbank loan to Atyrau Refinery LLP for the Aromatic Hydrocarbons Complex Construction Project (see Project ID#54066). 5. It is very likely that the KazMunayGas Atyrau Oil Refinery Construction Project was funded through the $3.5 billion restricted portion of the Master Loan Facility (MLF) that China Eximbank issued to the Development Bank of Kazakhstan JSC (as captured via Project ID#54797).

Number of official sources

25

Number of total sources

32