China Development Bank provides $840 million loan for acquisition of Hilli Episeyo FLNG production vessel

In 2015, China Development Bank issued an $840,000,000 senior loan to Fortune Lianjiang Shipping S.A., a special purpose vehicle and indirect subsidiary of shipping conglomerate CSSC (Hong Kong) Shipping Company Limited that is incorporated under the laws of the Republic of the Marshall Islands. This loan was intended to finance part of Fortune Lianjiang Shipping SA'S US$1.2 billion agreement with Golar Hilli Corporation, a company incorporated in the Republic of the Marshall Islands, for the acquisition of the FLNG production vessel "Hilli Episeoyo." On September 9, 2015, Fortune Lianjiang Shipping SA and Golar Hilli Corporation signed the memorandum of agreement for acquiring the vessel. In the 2015 pre-delivery financing agreements, Fortune Lianjiang Shipping S.A. partially financed the FLNG conversion works, which were backed by China Development Bank’s senior loan. For this agreement, Golar Hilli Corp. sold and leased back the Hilli vessel from Fortune Lianjiang Shipping S.A. under a 10-year bareboat charter agreement, which provides for post-construction financing of the Hilli of $960 million that Hilli Corp. will pay to Fortune Lianjiang Shipping S.A. in 40 consecutive equal quarterly repayments. On June 24, 2018, Golar Hilli Corp. repaid $640.0 million on the pre-delivery credit facility and drew down $960.0 million on the post-acceptance sale and leaseback financing in relation to the FLNG Hilli facility. The Hilli Episeyo is sub-Saharan Africa’s first floating LNG unit. Since its commissioning in 2018, it has operated at half capacity (1.2 mtpa), which will be increased to 1.4 mtpa next year. The capacity increase will be accompanied by the drilling and appraisal of two to three incremental gas wells by the end of 2021 and an upgrade of upstream facilities next year. At the end of 2020, Perenco had already completed works on the Sanaga 2 gas compression platform, which fall within phase 2 of the FLNG project and is already supporting gas production levels at the Hilli Episeyo. It is located off the shore of Cameroon (exact locational coordinates: 3.017162, 9.837292). The Marshall Islands-flagged FLNG production vessel was accepted under its Liquefaction Tolling Agreement with Anglo-French oil and gas company Perenco and Cameroon’s state-owned Societe Nationale des Hydrocarbures on June 4, 2018, and subsequently delivered to Fortune Lianjiang Shipping S.A. on June 20, 2018, at which point Fortune Lianjiang Shipping S.A. took full ownership of the vessel and a bareboat charter with Golar Hilli Corporation became effective. The vessel is already fully operating off the coast of Cameroon and the first of its cargoes has arrived in China. The Hilli Episeyo FLNG project develops Cameroon’s gas both for exports and for the domestic market. While all produced LNG is sold to Gazprom Marketing & Trading, the unit also produces up to 5,000 bpd of condensates and up to 30,000 tonnes of LPG for local consumption. As a result, Cameroon’s LPG imports were reduced by half following completion of all associated gas infrastructure three years ago. The project required substantial infrastructure development, including at the existing onshore Bipaga gas treatment plant which had until then been used to process and supply gas to the 214 MW Kribi gas-to-power plant. On top of 56km of pipeline infrastructure, new facilities were built to provide for the smooth operations of both projects, and the production of condensates and LPG.

Additional details

1. The borrowing terms of the loan agreement between China Development Bank and Fortune Lianjiang Shipping S.A. are unknown. This issue warrants further investigation.

Number of official sources

7

Number of total sources

11