China Construction Bank contributes to $5.65 billion syndicated loan for Project Marigold (Linked to Record ID#89494, #89495, #89485, #89486, #89497, and #89498)

Project narrative

On March 28, 2018, Pengerang Refining Company Sdn Bhd and Pengerang Petrochemical Sdn Bhd (collectively known as PRefChem) were legally incorporated as joint ventures owned by Petronas (50% equity stake) and Saudi Aramco (50% equity stake). PRefChem owns and operates the Refinery and Petrochemical Complex, which forms a significant part of the Pengerang Integrated Complex (PIC) in Malaysia’s southern state of Johor. The refinery complex has a capacity of 300,000 barrels of crude oil per day, and it produces a range of refined petroleum products, including jet fuel, motor gasoline and diesel meeting Euro 5 fuel specifications. It also provides feedstock for the petrochemical complex, that has a nameplate capacity of 3.4 million metric tonne per annum (MTPA). In March 2018, a syndicate of 19 banks — including Mizuho Bank, Industrial and Commercial Bank of China (ICBC), Standard Chartered, Bank of China, JP Morgan, SMBC, Mizuho, MUFJ, HSBC, CITI, and First Abu Dhabi Bank — signed an $8 billion bridge loan agreement with two borrowing institutions — Pengerang Refining Company Sdn Bhd and Pengerang Petrochemical Company Sdn Bhd — for Project Marigold in Malaysia. AidData estimates that BOC contributed $421,052,631 (captured via Record ID#89485) and ICBC also contributed $421,052,631 (captured via Record ID#89486) to this syndicated loan. The borrowing terms include an interest rate of LIBOR plus 40 basis points (0.40% margin) and a maturity length of 18 months. It was guaranteed by the debt service undertakings of the project sponsors, Petronas and Saudi Aramco. The proceeds from the bridge loan were to be used by the borrower to initiate construction while the borrowers finalized several long-term loan facilities with commercial banks and export credit agencies. On November 5, 2019, Pengerang Refining Company Sdn Bhd and Pengerang Petrochemical Company Sdn Bhd signed five, long-term loan facilities (tranches) collectively worth $9.5 billion: (1) a $5.63 billion, 15.5 year uncovered facility provided by Ambank, ANZ, BNP Paribas, Bank of China, Credit Agricole, China Construction Bank, CIMB Bank, Citibank, HSBC, ICBC, JP Morgan, Maybank, Mizuho Bank, MUFG, National Bank of Kuwait, OCBC, Standard Chartered Bank, Societe Generale, SMBC and UOB; (2) a $1.5 billion JBIC/Nexi-covered tranche with Citibank, Mizuho, MUFG and SMBC; (3) a $789 million Kexim/K-Sure-covered tranche with ANZ, BNP Paribas, Bank of China, Credit Agricole, DZ Bank, JP Morgan, Mizuho Bank and National Bank of Kuwait; and (4) a $794 million SACE-covered tranche with Bank of China, BNP Paribas, DZ, HSBC and JP Morgan; and (5) an $800 million CESCE-covered tranche with Banco Santander, BNP Paribas, DZ Bank, HSBC, JP Morgan, Natixis and Societe Generale. Although these loans were issued to two borrowers (Pengerang Refining Company Sdn Bhd and Pengerang Petrochemical Sdn Bhd), there is a cross-guarantee and pari passu treatment. Bank of China’s estimated contribution ($281,500,000) to the $5.63 billion, 15.5 year uncovered facility is captured via Record ID#89494. ICBC’s estimated contribution ($281,500,000) to the $5.63 billion, 15.5 year uncovered facility is captured via Record ID#89495. China Construction Bank’s estimated contribution ($281,500,000) to the $5.63 billion, 15.5 year uncovered facility is captured via Record ID#89496. Bank of China’s estimated contribution ($98,625,000) to the $789 million Kexim/K-Sure-covered tranche is captured via Record ID#89497 and its estimated contribution ($158,800,000) to the $794 million SACE-covered tranche is captured via Record ID#89498. The purpose of the project is to construct a refinery in Pengerang within the state of Johor with the capacity to process 300,000 barrels per day (bpd) of crude oil and produce Euro 5 gasoline and diesel, and other refined products, as well as feedstock for production of 3.3 million tons per annum (mtpa) of petrochemical products. To that end, the project involves development of a refinery complex, steam cracker and extraction complex, C2/C3 polymer complex and a C2 glycols petrochemical complex. The wider Pengerang Integrated Complex (PIC) scheme also involves separately funded projects, notably the Pengerang cogen project, an LNG regasification terminal, an air-separation unit, a raw water supply project, a liquid bulk terminal, and central and shared utilities and installations. Siemens AG, Siemens Malaysia, MMC Engineering, Técnicas Reunidas, Sinopec, JGC Corporation, Fluor Corporation of Texas, Italy's TechnipFMC, Mudajaya Group, VA Tech Wabag, Muhibbah Engineering and Wabag-Muhibbah JV, Axens, Bina Puri Holdings, DASCO, ATB Group, and Samsung Engineering are the contractors responsible for project design and implementation. A feasibility study and a site topographical survey and soil investigation work for the project were completed in October 2011. Front-end engineering design (FEED) and environmental impact assessment studies were also completed. In April 2014, the Petronas board of directors approved the final investment decision (FID) for the RAPID project. Construction of the facilities began in 2014 and was completed in November 2018. The refinery’s diesel hydrotreating unit attained ‘Ready For Start Up (RFSU)’ status in February 2019. However, in April 2019, the project was shut down for safety checks after a fire broke out at the atmospheric residue desulphurisation (ARDS) unit. The CDU was restarted in August 2019. The refinery achieved its first production of ultra-low sulphur diesel on August 9, 2019. Then, on November 22, 2019, Pengerang Refining and Petrochemical (PRefChem) achieved a major milestone with the lifting of 300,000 barrels of diesel from its refinery in Pengerang. This was the 5th lifting of diesel products since the refinery’s Diesel Hydrotreating Unit attained RFSU status. The project was originally expected to reach its commercial operations date (COD) during second half of 2020 and accelerate the growth of Malaysia’s oil and gas downstream sector. However, it has encountered several implementation delays. Upon completion, the project is expected to employ 70,000 workers during construction and generate 4,000 new jobs.