China Development Bank provides a $2 billion USD loan for the Atyrau Petrochemical Complex Construction Project (Linked to Project ID#40266)

In 2009, Kazakhstan Petrochemical Industries (KPI) LLP signed an Engineering, Procurement, and Construction (EPC) contract with Sinopec Engineering Co., Ltd. (through Sinopec Group subsidiary China Petroleum & Chemical Corporation) for the first stage of construction of Atyrau petrochemical project (see '哈萨克斯坦石油加工领域发展和炼厂改造情况' and 'Sinopec to build gas chemicals plant in Kazakhstan'). On February 22, 2011, the Development Bank of Kazakhstan JSC (DBK) entered into a $1.4 billion USD credit agreement with the Export-Import Bank of China to finance the construction of an integrated petrochemical project in the Atyrau Region of Kazakstan. However, as of 2017, no amounts had been drawn down under this credit agreement (see pg.67 of 'Development Bank of Kazakhstan Base Prospectus 2017'). This was due to the mutual termination of the EPC contract between KPI and Sinopec in 2014 (see 'Polypropylene plant will be built by the Chinese, but not by Sinopec Engineering'). Therefore, AidData has assumed that the China Eximbank loan was canceled (since the proceeds of this loan were to be used to fund the EPC contract with Sinopec). For this canceled loan, see Project ID#40266.Then, in December 2015, China National Chemical Engineering Corporation (CNCEC) signed an EPC contract with KPI to construct an integrated gas-chemical complex in the Atyrau Region on a turnkey basis (see 'Kazakhstan intends to continue construction of PP production in Atyrau...'). On September 3, 2016, the Xinjiang Branch of China Development Bank (CDB) signed a $2 billion loan agreement with KPI for the construction of the complex (see 'Atyrau Petrochemical Complex'). The loan carried the following terms: a maturity period of 20 years and an interest rate of 5.8%. National Welfare Fund Samruk-Kazyna JSC provided a guarantee for this loan on February 13, 2017. The loan was also secured by (i.e. collateralized with) all current and future assets of KPI. On November 24, 2017, CDB sent an advance payment of $409 million USD to CNCEC (see 'Technopark phase'). The project had a total cost of $2.6 billion USD; the CDB bank loan covered the entire cost of the $1.795 billion USD EPC contract with CNCEC; the remainder of the financing of the project was provided by the organizers of the project, KPI and its ownership (see 'Kazakhstan intends to continue construction of PP production in Atyrau...').KPI was the project company (special purpose vehicle) responsible for the financing, design, and construction of the Atyrau Petrochemical Complex Construction Project. KPI was 99% owned by United Chemical Company LLP, a subsidiary of JSC Sovereign Wealth Fund Samruk-Kazyna; the remaining 1% of KPI LLP was owned by a private investor, 'Firm Almex Plus” LLP (see 'About company'). Almex reportedly had a 49% ownership in November 2017, but this was either incorrect or an indication that it sold the majority of its shares to United Chemical Company LLP (see 'Kazakhstan intends to continue construction of PP production in Atyrau...').42 construction and installation companies were involved in the construction and installation work; 39 of which were Kazakhstani and 3 of which were foreign. The Kazakhstani companies included AtyrauNefteMash LLP, which produced the propane and propylene splitter, 'Petropavlovsk Plant of Heavy Machine Building' JSC and Sewon-Vertex Heavy Industries received orders for the production of 35 units and heat exchangers with a total weight (see 'Қазақстандық компаниялар мұнай-химия зауытын салуға қатысады ма'). Imstalcon JSC participated in the manufacture of equipment for the project, while the Kazakh Institute of Oil and Gas JSC participated in the design of the complex (see 'Integrated Gas Chemical Complex Construction Update'). Chicago Bridge & Iron Company (CB&I) received the PMC contract for project management (see 'History of the company'). The project was transferred from Samruk-Kazyna to the trust management of JSC NC KazMunayGas (KMG) in June 2018 (see 'Integrated Gas Chemical Complex Construction Update').Upon completion, the petrochemical complex was expected to produce 500,000 tons of polypropylene per year and be the first integrated gas-chemical complex in Kazakhstan (see 'White & Case Advises Kazakhstan Petrochemical Industries...'). The plant was expected to go online in 2020 (see '中国国家开发银行与哈萨克斯坦石油化学工业公司签署阿特劳天然气化工项目第一阶段建设融资协议'). On November 27, 2017, KPI sent a notice of the start of construction work to the general contractor (see 'Technopark phase'). The message was received and work began on December 11, 2017 (see 'CB&I Gets Go-ahead for Kazakhstan Petchem Project'). As of October 2020, the project had achieved a 77% completion rate and it was expected to be fully complete in 2021 (see 'Large petrochemical complex to be launched in western Kazakhstan in 2021”).

Additional details

1. This project is sometimes referred to as 'Construction of the first integrated gas chemical complex in Atyrau oblast,' 'Construction of an integrated gas chemical complex in the Atyrau region - the first phase (polypropylene), or 'Integrated Gas Chemical Complex (Phase I – polypropylene production). The Russian project title is газохимический комплекс по производству полипропилена.' 2. With respect to AidData's coding of the collateral and guarantee variables, the relevant passage from https://ucc.com.kz/wp-content/uploads/2020/01/godovoj-otchet-2018.pdf is on pg. 141: 'Заём был выдан под залог движимого и недвижимого имущества Компании «ТОО KPI», включая поступающие в будущем. В 2017 году АО ФНБ «СамрукКазына» предоставил гарантию в пользу ГБРК до полного исполнения Группой своих обязательств перед банком.' Set is_collateralized field to True. Set collateral field to “Movable and imovable property (current and future) of Kazakhstan Petrochemical Industries (KPI) LLP,”.

Number of official sources

16

Number of unofficial sources

15