ICBC participates in $1.18 billion loan facility for the 794 km Kenkiyak-Kumkol Section of the Kazakhstan-China Oil Pipeline Project (Linked to Project ID#39605 and #54523)

On August 12, 2008, Kazakhstan-China Pipeline LLP (KCP) (Қазақстан-Қытай Құбыры ЖШС or 中哈管道有限责任公司) entered into a $1.18 billion credit facility with the Industrial and Commercial Bank of China Limited (ICBC) and the ING Bank N.V. for a term of 10 years, subject to extension for up to 5 additional years. KCP had the right to draw down the loan in four tranches. It drew down three tranches in 2008 in an aggregate principal amount of $1 billion. The availability period of this credit facility expired at the end of 2011. The borrowed funds bore an interest rate of 6-month LIBOR plus a 2% margin per annum until February 2013 and 6-month LIBOR plus a 4% margin per annum thereafter. CNPC provided a guarantee for the loan. The borrower also purchased credit insurance from Sinosure. As of December 31, 2017, the outstanding principal amount under this facility was $403.9 million USD (including the capitalized interest) (₸134.3 billion KZT). The borrower was responsible for repaying the loan with profit (net income) from the Kenkiyak-Kumkol Section of the Kazakhstan-China Oil Pipeline. JSC KazTransOil (KTO) and China National Oil and Gas Exploration and Development Corporation (CNODC) formed a joint venture Limited Liability Partnership (LLP) called Kazakhstan-China Pipeline LLP (KCP) on July 6, 2004, each with a 50% stake. KCP was created to construct and operate the Atasu-Alashankou Pipeline and the Kenkiyak-Kumkol Pipeline. These pipelines are two of three pipeline systems of the Kazakhstan-China Pipeline Network, which was built to create a transport corridor for the export of Kazakhstani oil to China. The purpose of the $1.18 billion loan facility was to finance the construction the Kenkiyak–Kumkol pipeline section, which was intended to transport oil from West Kazakhstan and Aktobe oilfields. It began in Kenkiyak and ended in Kumkol. The pipeline was 794.263 km long and it had a maximum capacity of 10 million tons a year. It included relay pump stations to increase the volume of oil transported. The pipe had diameters ranging between 0.5 and 1.8 meters. The Kenkiyak-Kumkol pipeline passed through the Aktobe, Kyzylorda and Karaganda regions, with its oil destined for the Chinese market. JSC OGCC KazStroyService was responsible for the construction of the 483 km section from Kenkiyak to Aralsk, while China Petroleum Pipeline Engineering Co., Ltd. (CPPE) was responsible for the construction of a 311 km section to Kumkol. Construction of the Kenkiyak-Kumkol pipeline began on December 11, 2007. The pipeline went into operation on October 6, 2009. As of December 31, 2017, the pipeline had a throughput capacity of 9.2 million tonnes of crude oil per year. In 2017, 5.2 million tonnes of crude oil were transported through the pipeline. Pursuant to an agreement between the KTO and CNODC, the capacity of the Kenkiyak-Kumkol pipeline was increased from 10.0 million tonnes of crude oil per year to 20.0 million tonnes in 2015 so as to take advantage of expected increased production at Tengiz Field and Kashagan Field. Ten companies supply oil to the pipeline, which KCP has continued to own. The Kazakhstan-China Pipeline network is comprised of three systems: (i) the Kenkiyak-Atyrau pipeline, from Kenkiyak in western Kazakhstan to Atyrau on the Caspian Sea (see Project ID#54523); (ii) the Atasu-Alashankou pipeline, from Atasu in eastern Kazakhstan to Alashankou in western China (see Project ID#39605); and (iii) the Kenkiyak-Kumkol pipeline, from Kenkiyak to Kumkol in south Kazakhstan (see Project ID#54524). All three systems are operational.

Additional details

1. The breakdown of loan amounts between the 2 financiers (ICBC and ING Bank N.V) is not known. For the time being, AidData has estimated the contribution of ICBC by assuming that the two lenders contributed equal amounts ($590 million) to the loan syndicate. 2. Some sources refer to the face value of the August 2008 loan as $1,033,098,000. This issue warrants further investigation. 3. Based on the information provided in the project description and the underlying sources, AidData has coded the maturity length as 10 years and the grace period as zero. The all-in interest rate (5.108%) was estimated by adding 2% to average 6-Month LIBOR in August 2008 (3.108%). 4. The Kazakh project title is Кеңқияқ-Құмкөл мұнай құбыры or Қазақстан-Қытай құбыры жүйесі. The Chinese project title is 中哈石油管道 or 哈萨克斯坦—中国石油管道项目.

Number of official sources

9

Number of total sources

13