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

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.

Additional details

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.

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4

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12