Narrative
Full Description
Project narrative
On April 28, 2006 when PJSC Rosneft Oil Company (a Russian state-owned oil company) and China Petroleum & Chemical Corporation (a Chinese state-owned oil company) -- also known as Sinopec -- entered into an option agreement granting Rosneft the option to purchase controlling interest in OJSC Udmurtneft if Sinopec were to win the tender for purchasing 96.86% of Udmurtneft’s shares from OJSC TNK-BP. Then, on November 13, 2006, Bank of China signed a $3.6 billion credit facility with Taihu Limited — a special purpose vehicle (SPV) and joint venture between PJSC Rosneft Oil Company (a Russian state-owned oil company) [51% ownership stake] and Sinopec [49% ownership stake] that was legally incorporated in the Republic of Cyprus on July 17, 2006 — to facilitate the purchase of a 96.86% ownership stake in OJSC Udmurtneft, an oil producing company in the Udmurt Republic (located within Russia’s Volga Federal District) that holds the licenses for the development of 24 productive oil and gas condensate deposits, from OJSC TNK-BP as well as a 3.14% ownership stake from minority shareholders. The cash flows of OJSC Udmurtneft were to be used directly by the borrower to repay the loan, without recourse to the shareholders’ assets. The loan was secured by (i.e. collateralized against) OJSC Udmurtneft’s shares. Then, in December 2006, Taihu Ltd -- through CJSC Promleasing, its wholly owned subsidiary -- acquired a 96.86% equity interest in OJSC Udmurtneft for $3.5 billion as well as 3.14% from minority shareholders.
Staff comments
1. Information about the ownership structure of the SPV can be accessed via https://www.sec.gov/Archives/edgar/data/1123658/000134100413000367/form6k.htm. 2. As of December 31, 2005, Udmurtneft's proved reserves stood at 78.4 million tons (551 million barrels), proven and probable reserves — at more than 131 million tons (922 million barrels) of oil equivalent, as estimated by DeGolyer & MacNaughton. 3. During a November 11, 2006 meeting in Beijing, the President of Rosneft and the President of Sinopec decided that the companies should jointly develop a business plan and a five-year development program for Udmurtneft to enhance the company's operational efficiency. In order to set up grounds for long-term development of the Udmurtian venture, the new shareholders decided to expand the investment scope of exploration and development, as well as the upgrade of production infrastructure. 4. The Chinese project title is 中石化与俄罗斯石油联合收购的乌德穆尔特石油公司.