China Eximbank provides $199.5 million preferential buyer’s credit for the KazMunayGas Atyrau Refinery Project (Linked to Project ID#39556, #54797, and #85185)

On December 29, 2011, Atyrau Refinery LLP (ТОО "Атырауский нефтеперерабатывающий завод”) — a project company and subsidiary of Kazakh state-owned KazMunayGas — signed an engineering, procurement, and construction (EPC) turnkey contract for the KazMunayGas Atyrau Refinery Project with a consortium of contractors consisting of Sinopec Engineering Group (SEG), Marubeni Corporation, and JSC OGCC KazStroyService. SEG was the leader of the consortium; Marubeni Corporation participated in the logistics and procurement, as well as organizing financing from the Japan Bank for International Cooperation, while JSC OGCC KazStroyService participated in construction and local procurement under SEG's leadership. Then, on June 6, 2012, Atyrau Refinery LLP entered into a $1,130,408,642 buyer’s credit loan (BCL) agreement (#BLA201201 and #CL014-E/10 (№CL014-Е/10) with the Export-Import Bank of China for the Construction of Advanced Oil Refining Center at the Atyrau Refinery (as captured via Project ID#39556). The BCL bears interest at a rate of six-month LIBOR plus 4.1% per annum and matures on November 6, 2025. Sinosure provided $1.7 billion of buyer’s credit insurance (covering the loan principal and interest). The BCL received an official guarantee from the Government of Kazakhstan’s Ministry of Finance. JSC NC “KazMunayGas” also provided a guarantee for the loan. As of December 31, 2017, the outstanding principal amount under this loan was $1.1 million. Then, on October 15, 2012, the Development Bank of Kazakhstan JSC (DBK) entered into a $199.5 million preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC (2012) 46 Total No (234) and №ДБЗИ 241-Е/05-01] with the Export-Import Bank of China for the Construction of Advanced Oil Refining Center at the Atyrau Refinery (captured via Project ID#54798). The PBC carried the following borrowing terms: a 13-year maturity (final maturity date: October 15, 2025, a 4-year grace period, and an annual interest rate of 3%. This loan agreement was amended on October 30, 2014; however, the terms of the revision are unknown (captured via Project ID#85185). Nor is it clear if DBK on-lent the proceeds of the PBC to Atyrau Refinery LLP. As of June 30, 2017, the aggregate principal amount outstanding under the PBC was $179.5 million. As of December 31, 2020, the aggregate principal amount outstanding under the PBC was $110 million. The PBC was prepaid in full in January 2021. The total cost of the KazMunayGas Atyrau Refinery Project was $1,679,892,000.52. It was also financed by a $251,983,878 loan dated on August 17, 2012 (№DBZI 241-E / 05-01) from the Development Bank of Kazakhstan JSC, a $297,500,000 loan dated August 8, 2012 from the Japan Bank for International Cooperation (JBIC), and three loans dated July 27, 2012, November 13, 2012, and December 29, 2012 that collectively amounted to ₸20,790,000 KZT from JSC KazMunayGaz - Refining and Marketing. The loans also covered commissions for arranging loans and insurance premiums. The loans from China Eximbank, JBIC (which may have involved the Bank of Tokyo Mitsubishi UFJ, Ltd.), and DBK were all guaranteed by JSC NC “KazMunayGas”. Sinopec subsidiary Sinopec Luoyang Engineering Co., Ltd. was involved in the implementation of the project. Atyrau Refinery is one of the largest refineries in Kazakhstan and in 2011 refined 100,000 bbl of crude oil every day. The project sought to increase the productivity of Atyrau Refinery to 5.5 million tons per year and oil refining efficiency to 87%, gaining the yield of motor fuel up to 77%, corresponding to the international standards of Euro-4 and Euro-5. The project included the construction of 12 individual process units, a main facility with a catalytic cracking unit, designed for the conversion by delayed coking of the atmospheric distillation residues, heavy gas oil, vacuum gas oil and heavy gas oil into liquified petroleum gas, gasoline, and light cracking gas oil. The complex was set to include LPG desulfurization facilities, oligomerization, a naphtha hydro-treating unit, a gasoline and gas oil catalytic cracking unit, hydrogen production, isomerization units, etc. The project's groundbreaking ceremony was held on September 10, 2012. It was expected that the implementation period would be 41 months (41 months from the groundbreaking ceremony being February 2016) and that construction would be completed in 2016. The turnkey project was formally handed over to the project owner on May 30, 2019.

Additional details

1. This project is also known as the Advanced Oil Refining Complex Construction Project and the Deeper Oil Conversion Complex Construction Project. The Chinese name of this project is 哈萨克斯坦阿特劳炼油厂石油项目. The Russian project title is Проект "Казахстанский электролизный завод”. 2. AidData suspects that the PBC captured by this project partially financed DBK's earlier $251,983,878 loan dated on August 17, 2012 (№DBZI 241-E / 05-01); while the PBC came two months after this loan, DBK may have made that loan knowing China Eximbank planned to contribute. If this is the case, it would explain how the project cost was reported as $1,679,892,000.52 despite the existence of this loan, which would have otherwise substantially increased the amount of financing. However, as stated earlier, it is unclear if this PBC was used to on-lend by DBK; this is merely AidData's informed speculation. 3. There are some indications that DBK issued a $$1,063,660,000 loan to Atyrau Refinery LLP on July 30, 2010 with the expectation that the proceeds of this loan would be drawn from a China Eximbank loan (most likely the $1,130,408,642 BCL that was signed on June 6, 2012). 4. The $1.13 billion China Eximbank BCL to Atyrau Refinery LLP for the Deeper Oil Conversion Complex Construction Project is separate from the $884 million China Eximbank loan to Atyrau Refinery LLP for the Aromatic Hydrocarbons Complex Construction Project (see project ID#54066). It is very likely that the KazMunayGas Atyrau Oil Refinery Construction Project was funded through the $3 billion restricted portion of a China Eximbank Master Loan Facility (MLF) to the Development Bank of Kazakhstan JSC, as captured via Project ID#54797.

Number of official sources

23

Number of total sources

27