CDB provides $4 billion loan for Phase 1 of Galkynysh Gas Field Project (Linked to Project ID#41905)

On June 25, 2009, China Development Bank signed a $4 billion loan agreement with Turkmengaz (the state-owned natural gas company of Turkmenistan) for Phase 1 of the Galkynysh Gas Field Project (captured via Project ID#40393). The loan reportedly carried a 7-year maturity and 4.8426% interest rate; it was secured by natural gas exports to China (through a parallel gas sales agreement with PetroChina). As part of the transaction, Turkmengaz reportedly agreed to supply China with up to 40 billion cubic meters/year of natural gas for 30 years. Turkmengaz agreed to use the revenue it earned from a natural gas supply contract as a source of collateral. The borrower was expected to use the proceeds of the loan to partially finance an EPC contract between Turkmengaz and CNPC, which was signed on December 29, 2009. The purpose of the project’s first phase was to help develop the Galkynysh Gas Field (also known as South Yolotan–Osman Field). CNPC was the EPC contractor responsible for project implementation. Phase 1 commenced on February 28, 2011. The 1st gas well was drilled on May 20, 2011. Phase 1 was successfully completed and put into commercial operation on September 4, 2013. In March 2011, China Development Bank signed a loan-for-gas framework agreement with Turkmengaz for Phase 2 of the Galkynysh Gas Field Project. Nine month later, in April 2011, China Development Bank and Turkmengaz signed a $4.1 billion loan agreement for Phase 2 of the Galkynysh Gas Field Project (captured via Project ID#41905). The loan carried a 10-year maturity, a 3-year grace period, and an interest rate of 4.8855%; it was also reportedly secured by (i.e. collateralized against) natural gas export receipts to China (via PetroChina). The purpose of Phase 2 was to build facilities at the Galkynysh Gas Field that would process 30 billion cubic meters (bcm) per year. Phase 2 entered implementation on May 8, 2014. It was originally expected to reach completion in 2021. As of June 2021, the Government of Turkmenistan reported that it had full repaid both of the China Development Bank loans that were issued for the Galkynysh Gas Field Project (i.e. neither loan had any outstanding principal amount).

Additional details

1. This project is also known as the South Yolotan–Osman Field Project and the Ioujno-Elotenshoie Gas Field Project. The Russian project title is Газовое месторождение Галкыныш. 2. Some sources refer to a supplementary agreement covering CNPC's exploration and production activities at Bagitiyarlik, where the company had a license to produce up to 30 Bcm/year, and a separate contract through which Turkmengaz agreed to deliver 10 Bcm/year to CNPC. 3. The price at which the natural gas was sold to PetroChina in unknown. This issue warrants further investigation. 4. Some sources suggest that the CDB loan for Phase 1 was worth $3 billion rather than $4 billion. However, the borrowing institution claims on its website that it borrowing $8.1 billion into total from CDB, so AidData has coded the face value of the Phase 1 loan as $4 billion for the time being. This issue warrants further investigation. 4. Some sources suggest that the CDB loan for Phase 2 was issued in September 2013 rather than April 2011. This issue warrants further investigation. 5. The 2009 CDB loan's interest rate (4.8426%) and the 2011 CDB loan's interest rate (4.8855%) are drawn from the World Bank's Debtor Reporting System (see https://www.dropbox.com/s/ab8qt4n6jijcbhd/IDS_Average%20interest%20on%20new%20external%20debt%20commitments.xlsx?dl=0).

Number of official sources

19

Number of total sources

45