ICBC contributes to $970 million syndicated loan to Petroecuador (Linked to Project ID#91614)

On January 22, 2016, EP Petroecuador -- Ecuador's state-owned oil company -- signed a $970 million syndicated loan facility agreement with a consortium of banks to finance strategic government programs and/or projects in Ecuador. Known participants in the loan syndicate include ICBC Shanghai Pilot Free Trade Zone Branch, Industrial and Commercial Bank of China Limited (ICBC), the Export-Import Bank of China, China Minsheng Banking Corp. Ltd., Deutsche Bank AG, and Société Générale S.A. The syndicated loan facility carried the following borrowing terms: an interest rate of 3 month LIBOR plus a 6.2% margin, no grace period, and a 5 year maturity (final maturity date: February 26, 2021). The Republic of Ecuador — acting through its Ministry of Economy and Finance — issued a sovereign guarantee in support of the loan. The loan was linked to a multiparty contractual structure involving a crude oil delivery contract that EP Petroecuador entered into with PetroChina. On January 22, 2016, a multi-party agreement was executed between a Seller and Borrower (EP Petroecuador), a Buyer (PetroChina International), a Guarantor (Ministry of Finance of the Republic of Ecuador), and a Loan Syndicate Representative (Industrial and Commercial Bank of China Limited, Shanghai Pilot Free Trade Zone Branch). The multi-party agreement links the loan agreement to an Oil Sales and Purchase Contract, which was signed PetroEcuador and PetroChina on January 22, 2016. The Oil Sales and Purchase Contract outlines the terms and conditions governing the sale of 76,329,000 barrels of crude oil by PetroEcuador to PetroChina International between January 22, 2016, and July 22, 2021. Oil deliveries under the contract were based upon international spot prices, such as WTI plus or minus a spread, plus a premium paid due to the term of the contracts. The spread was calculated using Argus, a crude oil price assessment publication (“Argus”), and the quality of crude oil as measured by the American Petroleum Institute. The proceeds from these oil sales were then paid by PetroChina International into a Proceeds Account, which was opened by PetroEcuador with ICBC. The first loan tranche of $820 million was disbursed on February 2016. In November 2017, the parties entered into an amendment to the original credit facility agreement. The second loan tranche, of $150 million, was disbursed shortly thereafter (in November 2017).

Additional details

1. The $970 million syndicated loan agreement, which was signed on January 22, 2016, is not available in its entirety. However, the Oil Sales and Purchase Contract, which was signed PetroEcuador and PetroChina on January 22, 2016, can be accessed in its entirety via https://sistemasinternos.eppetroecuador.ec:8301/rcp/GCIComercial/invitaciones/contrato/CONTRATO_2016050/Contrato2016050.pdf. 2. The individual financial contributions of ICBC Shanghai Pilot Free Trade Zone Branch, Industrial and Commercial Bank of China Limited (ICBC), the Export-Import Bank of China to the syndicated loan are unknown. For the time being, AidData assumes equal financial contributions ($161,666,666) by the 6 known members of the loan syndicate. The transaction amount for ICBC is recorded as $323,333,333, as ICBC Shanghai Pilot Free Trade Zone Branch and Industrial and Commercial Bank of China Limited (ICBC) are two separate members of the loan syndicate. This issue warrants further investigation. 3. AidData has estimated the all-in interest rate by adding 6.2% to average 3-month LIBOR in January 2016 (0.620%). 4. The Ecuadorian Ministry of Finance loan identification number is 28096000.

Number of official sources

12

Number of total sources

20