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Overview

ICBC provides $60 million pre-export finance (PXF) facility to PetroRio

Commitments (Constant USD, 2023)$62,279,249
Commitment Year•2019Country of Activity•BrazilDirect Recipient Country of Incorporation•BrazilSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Feb 1, 2019
Last repayment
Jan 31, 2023

Geospatial footprint

Map overview

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This project sought to increase production in the Polvo offshore oil field in the Campos Basin. The Polvo field is located in the BM-C-8 Block in the southern part of the Campos Basin, 100km east of the Cabo Frio, Rio de Janeiro state, Brazil. The licence area in which the field is located is spread over approximately 134km2 and has a water depth of approximately 100m. More detailed locational information can be found at http://normas.receita.fazenda.gov.br/sijut2consulta/link.action?visao=anotado&idAto=121917 and https://mz-filemanager.s3.amazonaws.com/cecb3d3e-6bd6-4edd-b9b3-3cacde780cac/certification-reports/3ed6cd05230fc55352dd4f29af09ef512f14fd2506a42727a659e70ab7134985/certification_reports_2018.pdf and https://www.openstreetmap.org/node/1973965766#map=8/-23.097/-40.976

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Commercial Banks

  • Industrial and Commercial Bank of China (ICBC)

Receiving agencies

Private Sector

  • PetroRio

Implementing agencies

Private Sector

  • PetroRio

Collateral providers

Private Sector

  • PetroRio

Loan desecription

ICBC provides $60 million pre-export finance (PXF) facility to PetroRio

Grant element•6.8063%Interest rate (t₀)•5.79%Interest type•Variable Interest RateMaturity•4 years

Collateral

Proceeds from PetroRio’s sale of crude oil to PetroChina

Narrative

Full Description

Project narrative

In February 2019, ICBC and Petro Rio S.A. (‘PetroRio’) — a privately owned Brazilian oil company— signed a $60 million pre-export finance (PXF) facility to fund exports to China and increase production at the Polvo offshore oil field in the Campos Basin. The facility carried the following borrowing terms: a 4-year maturity and an interest rate of LIBOR plus a 3% margin. The PXF facility (loan) was underpinned by a corresponding marketing agreement (off take agreement) with PetroChina that allowed PetroChina to access crude oil produced at the Polvo Field on a right-to-match basis for the duration of the loan. The ICBC loan was repaid in full on December 29, 2020. The PetroChina Marketing Agreement was scheduled to remain in effect through June 29, 2021.

Staff comments

1. AidData has estimated the all-in interest rate by adding 3% to the average 6-month LIBOR rate in February 2019 (2.735%). 2. A pre-export finance (PXF) facility is an arrangement in which a commodity producer gets up-front cash from a customer in return for a promise to repay the customer with that commodity (possibly at a discount) in the future. PXF funds may be advanced by a lender or syndicate of lenders to a commodity producer to assist the company in meeting either its working capital needs (for example, to cover the purchase of raw materials and costs associated with processing, storage and transport) or its capital investment needs (for example, investment in plant and machinery and other elements of infrastructure). PXF facilities are usually secured by (1) an assignment of rights by the producer under an ‘offtake contract’ (i.e., a sale and purchase contract between the producer and a buyer of that producer of goods or commodities), and (2) a collection account charge over a bank account into which proceeds due to the producer from the buyer of the goods or commodities under the offtake contract are credited. There are two key documents in prepayment finance transactions: a contract providing for the advance payment by the offtaker to the producer for the purchase of goods/commodities (the 'Prepayment Contract'), and a loan agreement between a lender and the offtaker (the 'Offtaker Loan Agreement') under which the advance payment is financed. 3. The China-Latin America Commercial Loans Tracker, which is produced by the Inter-American Dialogue, does not capture this loan.