ICBC (Almaty) contributes to $300 million loan to refinance notes issued in 2005 for the Atasu-Alashankou Section of Kazakhstan-China Oil Pipeline Project

Project narrative

On July 6, 2004, JSC KazTransOil (KTO) — a state-owned oil pipeline operator in Kazakhstan — and China National Oil and Gas Exploration and Development Corporation (CNODC) created a special purpose vehicle called Kazakhstan-China Pipeline LLP (KCP or Қазақстан-Қытай Құбыры ЖШС or 中哈管道有限责任公司). KCP, which is jointly owned by KTO (50% equity stake) and CNODC (50% equity stake), 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. To finance the 965 km Atasu-Alashankou pipeline, CNODC and KTO contributed $50 million of their own funds (as captured by linked Record ID#39605). In addition, $600 million was raised through the issuing of Eurobonds by JP Morgan Bank. Then, in August 2013, KCP entered into a $300 million facility agreement with the Industrial and Commercial Bank of China Limited (ICBC) and the Industrial and Commercial Bank of China (Almaty) JSC (ICBC Almaty) to refinance obligations on bonds issued to finance the construction of the Atasu-Alashankou Section of Kazakhstan-China Oil Pipeline Project. This loan has a 10-year maturity (final maturity: 2023) and it bears interest at a rate of 6-month LIBOR plus a 3.75% margin per annum. As of December 31, 2017, the outstanding principal amount under this loan was $180 million (₸59.8 billion KZT). KCP is expected to repay borrowing funds using profit (net income). 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; (ii) the Atasu-Alashankou pipeline, from Atasu in eastern Kazakhstan to Alashankou in western China; and (iii) the Kenkiyak-Kumkol pipeline, from Kenkiyak to Kumkol in south Kazakhstan. All three systems are operational. The Atasu-Alshankou pipeline was initiated on September 28, 2004. It was completed and became operational on December 15, 2005. The original joint venture financing of the Atasu-Alashankou pipeline project is captured via Record ID#39605.