ICBC contributes to $1.6 billion syndicated pre-export finance facility with KMG Kashagan B.V. (Linked to Project ID#85198)

On November 29, 2016, KMG Kashagan B.V. signed a $1 billion pre-export finance facility (PXF) agreement with a syndicate of 8 banks (including ABN AMRO Bank N.V., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Mizuho Bank, Ltd., Cooperatieve Rabobank U.A., Sumitomo Mitsui Banking Corporation, the Brussels Branch of Credit Agricole Corporate & Investment Bank, the Paris Branch of Intesa Sanpaolo S.p.A., and the Brussels Branch of Vitol S.A.). The facility carries a 5-year maturity and an interest rate of LIBOR plus a 2.05% margine.JSC NC “KazMunayGas” issued a corporate guarantee in support of the agreement. The PXF agreement was part of a larger, advanced oil sale transaction, in which KMG Kashagan B.V. acted as the seller, Heston B.V. acted as buyer, and Vitol S.A. acted as as offtaker. The purpose of the transaction was to facilitate the advanced sale by KMG Kashagan B.V. of 6.9 million tons of crude oil (between 2017 and 2021) produced at the Kashagan Field. Then, on August 04, 2017, in order to finance the repayment of the second installment under a Sale and Purchase Agreement dated October 31, 2008 (‘SPA 2008’), which was concluded for acquisition of 8.48% participation share in Production Sharing Agreement in respect of North Caspian Sea, a number of additional agreements were signed for upsizing of the amount of the November 29, 2016 PXF agreement. On August 10, 2017, the PXF agreement was ‘upsized’ by $600 million (to $1.6 billion) and the KMG Kashagan B.V. made early repayment of the second installment under SPA 2008 in the total amount of $804.4 million (including principal amount and interest accrued). 6 additional banks joined the lending syndicate when the ‘upsized’ agreement was signed on August 10, 2017: Bank of China, Industrial and Commercial Bank of China Ltd, Societe Generale, Unicredit S.P.A., Credit Suisse AG, and NATIXIS. Then, on August 9, 2018, another $600 million ‘upsizing’ of the PXF facility was announced (bringing the total size of the PXF facility to $2.2 billion). OnOctober 29, 2021, KMG Kashagan B.V. announced that it had fulfilled its repayment obligations under the PXF agreement thanks to measures to optimize cash flows and favorable oil prices. Bank of China’s contribution to the August 10, 2017 syndicated PXF agreement is captured via Project ID#85198. ICBC’s contribution to the August 10, 2017 syndicated PXF agreement is captured via Project ID#91752.

Additional details

1. The individual contributions of Bank of China and Industrial and Commercial Bank of China to the syndicated loan are unknown. For the time being, AidData assumes that all 14 members of the lending syndicate contributed equal amounts ($157,142,857). 2. A pre-export finance (PXF) facility an arrangement in which a commodity (e.g. oil) 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), (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. KMG Kashagan B.V.. is a subsidiary of KazMunayGas, the state-owned oil and gas company of Kazakhstan. It has a 16.88% in the Kashagan field, which is part of the North Caspian project operated by the North Caspian Operating Company (NCOC) consortium. Its shareholders are: AgipCaspian Sea BV (16.81%), KMG Kashagan BV (16.88%), ExxonMobil Kazakhstan Inc. (16.81%), Inpex NorthCaspian Sea Ltd. (7.56%), Shell Kazakhstan Development BV (16.81%), Total EP Kazakhstan (16.81%) and CNPC Kazakhstan BV (8.33%). 4. Some sources refer to Heston B.V. as the borrower. This issue merits further investigation. 5. Some sources indicate that the first upsizing of the PXF facility was $596.974 million rather than $600 million. This issue merits further investigation. 6. AidData has calculated the all-in interest rate by adding 2.05% to the average 6-month LIBOR rate in November 2016 (1.269%).

Number of official sources

1

Number of total sources

1