CDB participates in $2.54 billion syndicated loan to Uz-Kor Gas Chemical LLC for Ustyurt Natural Gas and Petrochemicals Complex at Surgil Gas Field Project

In May 2012, a consortium of banks including the China Development Bank (CDB) signed a $2.54 billion syndicated loan agreement with Uz-Kor Gas Chemical LLC -- a special purpose vehicle and joint venture of Uzbekneftegaz (50%), Lotte Chemical Corporation (17.5%), Korea Gas Corporation (17.5%), SK Group (5%), STX (5%) and LG Corporation (5%). that was created in May 2008 -- for the Ustyurt Gas Chemical Complex Project. The $4 billion mega-project was located in the Surgil Gas field. The complex consisted of a gas separation plant, units producing 400,000 tonnes per year of high-density polyethylene, 100,000 tons of polypropylene, and 110,000 tonnes of pryolised gasoline beginning in 2016. The project's debt-equity ratio was about 65:35, with the debt portion amounting to $2.539 billion. CDB provided approximately 10% of the total debt financing for the project (approximately $250 million) with a maturity of 17.25 years (final maturity date: July 2029) and a 10% interest rate. The breakdown of the remaining 90% of the debt financing was as follows: 1. $700 million (28%) from the Export-Import Bank of Korea; 2. $125 million (5%) from Asian Development Bank; 3. $800 million (31%) from a KSure covered tranche loan. Under this tranche loan, $500 million came from Korea Finance Corporation, $225 million from Korea Development Bank, $25 million from ING Group, and $50 million from Credit Suisse; 4. $100 million (4%) from National Bank of Uzbekistan; 5. $300 million (12%) from a KEXIM-covered tranche loan. Under this tranche loan, $75 million came from Korea Development Bank, $75 million from ING Group, $25 million from Credit Suisse, $75 million from Siemens Financial Services, $10 million from BayernLB, and $40 million from SEK; 6. $140 million (6%) from an EKN covered tranche loan. Under this tranche loan, $60 million came from Nordea, $60 million from ING Group, and $20 million from SEK; 7. $124 million (5%) from a Hermes covered tranche loan. Under this tranche loan, $64 million came from KfW and $60 million from BayernLB. The equity portion of this project's financing amounted to $1.4 billion. Below is a list of key project milestones: 29 March 2006 – during the State Visit of the President of the Republic of Uzbekistan His Excellency Islam Karimov to the Republic of Korea, a memorandum on integrated development of the Surgil field was signed between UNG and KOGAS 18 February 2008 – the first Presidential Decree was issued in order to commence works on the Project 4 August 2009 – the second Presidential Decree was issued to further support the development of the Project 11 February 2010 – during the official visit of the President of the Republic of Uzbekistan to the Republic of Korea, the Investment Agreement on the Surgil Project was signed between the Government of the Republic of Uzbekistan, Uz-Kor, the Korean Consortium and UNG. This agreement grants the Project rights to conduct business under terms suitable for an international project finance transaction, as well as providing certain protections to the South Korean investors Q4 2010 – initiation of formal discussions with the Korean Agencies and Asian Development Bank 15-16 March 2011 – Bank Roadshow in Tashkent attended by over 60 bankers from Europe and Asia 15 April 2011 – the Supplemental Investment Agreement was signed between the above parties 23 August 2011 – during the Official Visit of the President of South Korea His Excellency Lee Myung-bak to the Republic of Uzbekistan, key commercial terms of EPC contracts were signed. The UGCC work is divided into three lump-sum EPC contracts: (i) utilities and offsite works (Hyundai Engineering Company), (ii) ethylene cracker (GS Engineering and Construction), and (iii) downstream gas separation plant and polymer plants (Samsung Engineering). The Upstream work will be carried out by UNG 24 August 2011 – stone-laying ceremony for the Project in the honorary presence of Presidents of Republic of Korea and Republic of Uzbekistan 16 September 2011 – formal launch of project financing to the international commercial bank market • 27 September 2011 – signing of financing term sheet between Uz-Kor, Korean Export Credit Agencies and Asian Development Bank 19 May 2012 – signing of Common Terms Agreement, individual finance agreements and project agreements by Uz-Kor and its lenders in the presence of the Deputy Prime Minister of Uzbekistan and Ambassador of South Korea 21 May 2016 — The project was completed ahead of schedule.

Additional details

1. This project is also known as the Ustiurt Gas-Chemical Complex Project and the Ustyurt Gas-Chemical Complex Project. 2. The national holding company Uzbekneftegaz is a state-owned holding company of Uzbekistan's oil and gas industry. 3. The borrowing terms of the CDB loan were drawn from https://webdev.ung.uz/media/allfiles/files/27a7d356e40049e6833fdefd1e3be96c.pdf

Number of official sources

9

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17