China Eximbank provides a $2.759 billion USD loan as part of a $8.5 billion USD syndicated facility for the Australia Pacific LNG (APLNG) Project (Linked to Record ID#49909, #49966, #95283, and #95284)

Project narrative

On May 23, 2012, financial close was reached on the $12.893 billion USD ($13.23247 billion AUD) Australia Pacific LNG (APLNG) Project, which included $8.500 billion USD ($8.7238 billion AUD) in non-recourse debt (divided into three tranches) and $4.393 billion USD ($4.50867 billion AUD) in equity. As part of the financing, the Export-Import Bank of China entered into a $2.759 billion USD ($2.83164 billion AUD) direct loan agreement with Australia Pacific LNG Processing Pty Limited — an Australia-incorporated special purpose vehicle (SPV) and wholly owned subsidiary of Australia Pacific LNG Pty Limited (APLNG), itself a joint venture that, at the time of financial close, was between the United States' ConocoPhillips (42.5% equity), Australia's Origin Energy Limited (42.5% equity), and China Petroleum & Chemical Corporation (Sinopec) (15% equity) — for the APLNG Project. This loan carried a maturity period of 16 years and a final maturity period of May 23, 2028. While financial close was achieved on May 23, 2012, China Eximbank did not sign the definitive documentation due to the bank's internal process and procedures. China Eximbank then signed the final project finance document on June 8, 2012. Record ID#49908 captures the China Eximbank loan. In addition to the China Eximbank direct loan, a syndicate of 15 lenders — including the Bank of China (BOC) — entered into a $2.875 billion USD ($2.95070 billion AUD) syndicated loan agreement with Australia Pacific LNG Processing Pty Limited. This loan carried a maturity period of 16 years and a final maturity period of May 23, 2028. The interest rate on this commercial tranche would be LIBOR plus a margin of 250 basis points (bps) during the four-year construction period, with the margin then increasing to 275 bps for years one to eight, then 300 bps for years nine to 12, and then to 325 bps for years 13 to 16. The loan also carried a participation fee of 200 bps. BOC contributed $50 million USD to the $2.875 billion USD loan. Record ID#49909 captures BOC's contribution. In addition to BOC, the following lenders contributed the following amounts and served in the following roles: Australia and New Zealand Banking Group (ANZ) ($350 million USD), Export Development Canada (EDC) ($300 million USD), Westpac Banking Corporation ($300 million USD), Commonwealth Bank of Australia (CBA) ($250 million USD), Mizuho Corporate Bank, Ltd. (MHCB) ($250 million USD), National Australia Bank Limited (NAB) ($250 million USD), Sumitomo Mitsui Banking Corporation (SMBC) ($250 million USD), HSBC Bank USA, N.A. ($200 million USD), the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) ($150 million USD), Bank of Scotland International (Australia) ($125 million USD), the Hong Kong Branch of Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) ($100 million USD), DBS Bank ($100 million USD), DNB Bank ASA Singapore ($100 million USD), and Société Générale S.A. (SocGen) ($100 million USD). BOC and all other 14 lenders served as mandated arrangers. ANZ served as facility agent. Furthermore, the Export-Import Bank of the United States entered into a $2.866 billion USD ($2.94146 billion AUD) loan agreement with Australia Pacific LNG Processing Pty Limited. This loan carried a maturity period of 17 years and a final maturity date of May 23, 2029. This was the second largest single project loan in the US Ex-Im Bank's history. The sponsors — ConocoPhillips, Origin Energy, and Sinopec — provided shareholder guarantees to the lenders during the four-year construction phase, to be lifted when APLNG became operational. Additionally, each sponsor contributed to the $4.393 billion USD equity used in project financing: ConocoPhillips ($1.64735 billion USD; $1.69072 million AUD), Origin Energy ($1.64735), and Sinopec ($1.0983 billion USD; $1.12722 billion AUD). APLNG made its first principal and interest repayment on the debt in March 2017, and was scheduled to make bi-annual payments until March 2029 As of December 31, 2018, all amounts had drawn from the $8.5 billion USD facility. In September 2018, Australia Pacific LNG Processing Pty Limited completed a $1.4 billion USD United States Private Placement (USPP) bond facility; it used the proceeds of the notes to repay the $1.4 billion USD in debt to China Eximbank. As of December 31, 2018, all amounts had drawn from the $8.5 billion USD facility. Then, on March 28, 2019, financial close was reached on a deal in which a syndicate of 25 banks — including BOC, China Construction Bank Corporation (CCB), and the Industrial and Commercial Bank of China (ICBC) — provided a $2.55 billion USD term loan to Australia Pacific LNG Processing Pty Limited for Australia Pacific LNG (APLNG) 2019 Refinancing Project. This loan carried a maturity period of nine years, a maturity date of March 28, 2028, and an interest rate of ICE LIBOR plus a margin of 150 bps. The proceeds of this loan were used for the refinancing of the APLNG Project, namely repaying the remainder of China Eximbank debt and the commercial bank facility. BOC contributed $170 million USD, CCB contributed $170 million USD, and ICBC contributed $75 million USD. Record ID#49966 captures BOC's contribution. Record ID#95283 captures CCB's contribution. Record ID#95284 captures ICBC's contribution. The APLNG Project was a coal seam gas (CSG) to liquefied natural gas (LNG) project intended to deliver cleaner energy. There were three major components of the project: additional development of gas wells and accompany infrastructure in the natural gas fields in the 17,000 square kilometer Surat and Bowen Basins in southwest and central Queensland; the construction of a 520 kilometer 52-inch high pressure gas transmission pipeline to transport the coal steam gas from the fields to an LNG facility on Curtis Island off the coast of Gladstone, Queensland; and the construction of a LNG facility and terminal on Curtis Island, with the first two 4.5 million tons per annum gas production trains capable of processing up to 9 million tons per annum. The project included centralized gas processing processing and compression stations and two water treatment facilities, Condabri Central (20 kilometers south of Miles) and Reedy Creek (130 kilometers northwest of Miles) in the Surat Basin region. The project had an expected service life of at least 30 years. Origin would operate the upstream portions, namely the gas fields and pipeline, while ConocoPhillips would operate the LNG facility. The LNG off-takers for the project would be Sinopec (7.6 million tons per annum over 20 years) and Kansai Electric Power Company (KEPCO) (1 million tons per annum over 20 years). Sinopec's off-take arrangement was the largest such agreement in Australia ever. In 2008, ConocoPhillips and Origin Energy signed an agreement on what would become the APLNG Project, with Origin being the intended operator of the production and pipeline and ConocoPhillips the intended operator of the LNG facility. Then, in April 2011, Sinopec signed an off-take agreement with APLNG for the supply of 4.3 million tons of LNG annually for a 20-year period and a subscription agreement in which Sinopec could acquire a 15% equity in APLNG. The subscription agreement was completed in August 2011. The Australian Federal Government issued environmental approval for APLNG in 2011. Then, in January 2012, Sinopec and APLNG signed an amendment to the LNG sale agreement to increase the supply of LNG by an additional 3.3 million tons annually. In June 2012, Kansai Electric Power Co. signed an LNG purchase agreement with APLNG for 1 million tons of LNG annually. In July 2012, the APLNG sponsors agreed to develop a second 4.5 million tons per annum LNG production train for the project. Furthermore, post-financial close in July 2012, Sinopec acquired an additional 10% stake in APLNG. With this subscription, the ownership breakdown of APLNG was as follows: ConocoPhillips (37.5% equity), Origin Energy (37.5% equity), and Sinopec (25% equity). Leighton Contractors and East Coast Pipeline were contracted to deliver the gas gathering system. Laing O’Rourke was contracted to construct the gas processing facilities. Leighton Contractors was contracted to construct two water treatment plants. A joint venture between McConnell Dowell and Consolidated Contracting Co. (MCJV) was responsible, via a July 2011 contract, for the engineering, procurement, and construction (EPC) of the pipeline. Metal One was contracted to delivery line pipe. Powerlink was contracted to deliver the electrification works for Train 1. Bechtel was contracted under a fixed price contract for all work on Curtis Island, including the camp, the LNG foundations, the module yard, the roll-on roll-off facilities, and the material off-loading facility. Tallai was contracted for work on the upstream field projects in southeast Queensland, including ancillary works, well delivery, and project management services. Bechtel International Inc. awarded a contract to Honeywell for the design and implementation of automation and safety solutions for the multi-train LNG facility. Sembcorp Marine Ltd. was contracted for the assembly of 69 cryogenic process and piperack modules. Auspat Land Survey Australia was contracted to survey the water treatment facilities locations associated with the pipeline for Leighton Contractors. Cryeng Group was awarded a contract for the design and fabrication of 4 kilometer of Vacuum Jacketed Pipe (VJP) for the project. Maxcon Industries, a sister company, manufactured the ethylene drums. DBM Vircon was contracted to aid the engineering and design of the Nitrogen skid in APLNG's upstream portion of APLNG project. GRC Quantity Surveyors was contracted to assist Leighton Contractors with estimation, contract administration, procurement, dispute resolution, and insurance claims services. LFF Group was contracted o provide piping materials and special Non Slam Wafer Check Valves, to Turkish fabricator Cimtas and directly to the project site. Leighton Contractors contracted Waltz Group to construct a work accommodation camp for the LNG terminal project site.. Nilsen was contracted to work on the water treatment facility control facilities in Condabri Central and Reedy Creek. CE Group was awarded a contract by Leighton Contractors for electrical services on 10 permanent buildings, including the main control administration facility, the marine terminal building, the fire station medical facility, the dangerous goods store, waste storage, and marine guard house, as well as the assembly and installation of main switchboards and placement of 18 kilometers of underground cable. Stantec was contracted to provide detailed design services for the two water treatment facilities. Silverstrand Pty Ltd was contracted by Leighton for structural concrete works, installation of pipework, rock protection, and grouting at the Condabri water treatment facility. Hall Contracting was contracted to install the HDPE pipeline for Condabri and then pipeline construction works at Reedy Creek. Longitude Engineering was contracted to support the transportation of LNG modules to the project. Nacap Australia Pty Ltd won a contract for a High Pressure Gas Network (HPGN), namely constructing construct approximately 170 km pipelines and above ground facilities. The project was scheduled to begin exporting LNG by mid-2015. As of June 30, 2013, the project was about 45% complete. LNG production on Curtis Island commenced on December 11, 2015. APLNG's first LNG cargo departed on January 9, 2016. Once in operation, the APLNG Project became eastern Australia's largest producer of natural gas in eastern Australia. Each year, APLNG supplied enough LNG to meet approximately 30% of the demand of the Australian east coast domestic gas market. This project was subject to criticism over its perceived environmental damage; the U.S. Export-Import Bank faced a lawsuit over alleged breaches of the United States Endangered Species Act based on harm to migratory marine life. Curtis Island is located on the edge of the Great Barrier Reef. In addition to the Australia Pacific LNG Terminal, Curtis Island hosts the Gladstone LNG Terminal and Queensland Curtis LNG Terminal; to support these terminals, the Port of Gladstone was dredged and widened, causing ocean turbidity changes and potential damage to local wildlife and the fishing industry. In 2017, a Bloomberg article cited the presence of these three LNG terminals as a case of 'infrastructure duplication', with each of the terminals' jetties crowding the coastal land when shared infrastructure could have produced the same amount of LNG with a lesser footprint. Moreover, the use of coal seam gas was controversial. Coal steam gas is created by the geological process of heating and compressing of plant matter that forms coal; in this process, methane forms within the coal, which is trapped by water in the gaps and cracks between coal molecules, known as cleats. Coal steam gas is increasingly extracted through hydraulic fracturing (fracking). In May 2010 toxic chemicals (benzene, toluene, ethylbenzene and xylene (BTEX)) were discovered in eight exploration wells in the Surat Basin owned by APLNG, raising concerns from Australian environmental activists and farmers.