CDB contributes $1.75 billion to $3.5 billion syndicated loan for Uzbek Sections of Lines A and B of the Central Asia-China Gas Pipeline Project (Linked to Project ID#54489, #39997, #54528, #39955, #70616, #91898, #91917, #91923, #91926, #91901)

On April 30, 2007, the Chinese Government and the Government of Uzbekistan reached in principle agreement on the construction and operation of the Uzbek Sections of Lines A and B of the Central Asia-China Gas Pipeline. Then, in July 2007, China National Petroleum Corporation (CNPC) and Uzbekneftegaz signed an agreement on construction and operation of the Uzbek Sections of Lines A and B of the Central Asia-China Gas Pipeline. On November 18, 2008, Asia Trans Gas LLC (or Asia-Trans Gas LLC or СП ООО “Asia TransGas”) — a special purpose vehicle and joint venture of Trans-Asia Gas Pipeline Company Limited (TAPLINE) [50% equity stake] and Uzbekneftegaz National Holding Company (UNG) [50% equity stake] that was created on January 28, 2008 — signed a $3.5 billion syndicated loan agreement with China Development Bank (CDB) and Bank of China (BoC) for the Uzbek Sections of Lines A and B of the Central Asia-China Gas Pipeline Project. CDB's $1.75 billion contribution is captured in Project ID #91901 and BOC's $1.75 billion contribution is captured in Project ID #91917. The borrowing terms of the syndicated loan are unknown. However, it is known that the borrower pledged the pipeline itself as a source of collateral to the lenders. The proceeds of the loan were used by the borrower to finance EPC contracts with China Petroleum Pipeline Bureau, China Petroleum Engineering and Construction Corporation (CPECC), and Zeromax GmbH. The purpose of the project was to construct the Uzbek sections of Line A and Line B of the 1873 km Central Asia-China Gas Pipeline. These sections both measure 529 km in length and they run parallel to each other from Gedaim on the Turkmen-Uzbek border through central Uzbekistan. The project also involved the construction of three compressor stations. China Petroleum Pipeline Bureau, China Petroleum Engineering and Construction Corporation (CPECC), and Zeromax GmbH were the EPC contractors responsible for project implementation. A formal groundbreaking ceremony took place on June 30, 2008. Then, on October 1, 2008, the first compressor station of the Central Asia-China Gas Pipeline was built in Uzbekistan's Qasqadaryo province. The Uzbek section of Line A was put into operation in December 2009. Also, on December 14, 2009, the Presidents of China, Turkmenistan, Kazakhstan and Uzbekistan attended the inauguration ceremony of the China-Central Asia Gas Pipeline at the gas plant on the right bank of the Amu Darya River in Turkmenistan, and turned on the gas flow together. The first batch of gas arrived in China in January 2010. Then, on June 9, 2010, CNPC signed a framework agreement on the purchase and sale of natural gas with Uzbekneftegaz, which specified that Uzbekistan would supply 10 billion cubic meters of natural gas to China annually. Two months later, in August 2010, the Uzbek section of Line B was officially commissioned. The Uzbek section of Line B became operational in October 2010. A delivery capacity of 30 billion cubic meters per annum was reached by the end of 2011. It was originally envisaged that the Uzbek section of Line A would be built by December 31, 2009 and put into operation by January 2010, while the Uzbek section of Line B would reach completion by December 31, 2011. Then, on September 21, 2011, CNPC and Uzbekneftegaz signed an agreement on the construction and operation of the Uzbek Section of Line C of the Central Asia-China Gas Pipeline. In 2013, Asia Trans Gas LLC signed a $1.4 billion syndicated loan agreement with China Development Bank and Bank of China for the Uzbek Section of Line C of the Central Asia-China Gas Pipeline Project. CDB’s contribution to the syndicated loan amounted to $1.2 billion (captured via Project ID#54528). Given that there are only two known members of the loan syndicate, AidData assumes that Bank of China contributed the remaining $200 million. Bank of China’s contribution is captured via Project ID#91898. The purpose of the project was to construct the Uzbek section of Line C of the 1873 km Central Asia-China Gas Pipeline. The Uzbek section measures 529 km in length and its runs parallel to Lines A and B from Gedaim on the Turkmenistan-Uzbekistan border through central Uzbekistan. Line C ultimately ends in Horgos, in the Xinjiang region of China. With a designed capacity of 25 billion cubic meters per annum, Line C’s pipe diameter is 1,219 mm, 152 mm larger than Line A and Line B. The total estimated cost of the Uzbek Section of Line C of the Central Asia-China Gas Pipeline Project was $2.2 billion. China Petroleum Pipeline Bureau was the EPC contractor responsible for project implementation. It was notified that the project’s official commencement date was August 1, 2012. Then, on August 10, 2012, the first batch of steel pipes arrived in Uzbekistan. Construction of Line C began on January 16, 2013. The overall welding work for Line C was completed at the end of 2013. Line C went into operation on May 31, 2014 and it was officially commissioned on July 9, 2015. Upon completion of all its supporting facilities by the end of 2015, Line C was expected reach its designed annual deliverability of 25 billion m3. By the end of 2015, the overall delivery capacity of the Central Asia-China Gas Pipeline was expected to hit 55 billion cubic m3 per annum (which is equivalent to approximately 20% of China’s natural gas consumption).

Additional details

1. The Chinese project title is 中亚天然气管道乌兹别克斯坦段 or 中亚天然气管道建设项目 or 中亚天然气管道工程(A、B线项目). The Russian project title is Узбекский участок Трубопровод Центральная Азия - Китай or Узбекский участок Трубопровод Газопровод Туркмения - Китай. 2. TAPLINE is a a wholly owned subsidiary of China National Petroleum Corporation (CNPC). 3. For evidence that the pipeline itself is the underlying source of collateral, see https://www.research.manchester.ac.uk/portal/files/188959328/FULL_TEXT.PDF. 4. Asia Trans Gas LLC was legally incorporated on January 28, 2008. 5. The national holding company Uzbekneftegaz is a state-owned holding company of Uzbekistan's oil and gas industry. 6. Zeromax GmbH was a private sector conglomerate registered in Switzerland and operating mainly in Uzbekistan and was the largest investor in the Uzbek economy. Before being dissolved in 2010, the company was registered in Zug, Switzerland. Prior to this, Zeromax was registered in Delaware in the United States before moving to Switzerland in 2005. In May 2010, Zeromax GmbH was suddenly and mysteriously shut down. The company officially filed for bankruptcy on October 28, 2010, at which point administrators were appointed and the company’s assets were seized. In March 2010, months before the company’s closure, Zeromax’s chief executive, Miridal Djalalov, was allegedly detained for ‘questioning.’ He was later released. Swissinfo wrote in 2021 that Zeromax was ‘closely associated’ with Gulnara Karimova, daughter of a former Uzbek president. 7. One of the sources underpinning this record (a law firm that served as a transaction adviser) refers to $11 billion of project financing from CDB to two joint ventures established by CNPC in Kazakhstan and Uzbekistan for the Central Asia Gas Pipeline Project. See https://www.dropbox.com/s/26bg8wr3kby6nlw/%E4%B8%AD%E4%BC%A6%E5%BE%8B%E5%B8%88%E4%BA%8B%E5%8A%A1%E6%89%80.pdf?dl=0. This is a reference to the combined value of the $7.5 billion syndicated CDB/BoC loan with Asia Gas Pipeline LLP (AGP) in October 2008 for the Kazakh Sections of Lines A and B (captured via Project ID#54489) and the $3.5 billion syndicated CDB/BoC loan with Asia Trans Gas LLC in November 2008 for the Uzbek Sections of Lines A and B (captured via Project ID#91901 and 91917). 8. This transaction was won Asian Legal Business’ Project Finance Deal of the Year 2009. Geraint Hughes, Clifford Chance’s Regional Head of Energy and Infrastructure, was a legal adviser for this transaction. 9. The Central Asia-China Gas Pipeline—also known as the Turkmenistan-China Gas Pipeline or the Asia Gas Pipeline—is a 1,873-kilometer long gas pipeline connecting Turkmenistan to China via Uzbekistan and Kazakhstan, which delivers gas equal to approximately 20% of China’s annual natural gas consumption. It consists of 4 lines (A, B, C, and D). Lines A, B, and C run parallel to each other. These three pipelines begin at Gedaim on the Turkmen-Uzbek border, run through central Uzbekistan and southern Kazakhstan, and end at Khorgas in China's Xinjiang Uyghur Autonomous Region. Roughly 188 kilometers of Lines A-C are in Turkmenistan, roughly 529 (or 530) kilometers of Lines A-C are in Kazakhstan, and roughly 1115 (or 1300) kilometers of of Lines A-C run from Kazakhstan to China. Line D, which is still under construction, will be 966 kilometers in length and connect Galkynysh to western China via Kyrgyzstan and Tajikistan. It will originate at the Galkynysh gas field in Turkmenistan. Then, in Tajikistan, Line D will run through Tursunzoda, Shahrinav, Hisor, Roudaki, Vahdat, Fayzobod, Nourobod, Rasht and Lakhsh (formerly Jirgatol) to Kyrgyzstan’s border. It will then go through Kyrgyzstan, crossing into China near the village of Irkeshtam on the Kyrgyzstan-China border. The Central Asia-China Gas Pipeline is supplied from the Galkynysh and Dauletabad gas fields, as well as from the Bagtyyarlyk gas field in Turkmenistan, where it originates. The pipeline is also supplied with gas from the Beineu-Bozoy-Shymkent Gas Pipeline to which it is linked in Shymkent, Kazakhstan. The Beineu-Bozoy-Shymkent Gas Pipeline delivers gas originating in gas fields of Kazakhstan. Line A and Line B connect to the Second West-East Gas Pipeline, while Line C connects to the Third West-East Gas Pipeline. Line D, which is under construction, will connect to the Fifth West-East Gas Pipeline. Line A, B, and C provide 55 billion cubic meters (bcm) of gas to China per annum. Line D is planned to have capacity of 30 bcm/year. 10. The construction of the China-Central Asia Gas Pipeline was financed through a series of Chinese loans and equity investments: $7.5 billion syndicated CDB/BoC loan for Kazakh Section of Lines A and B (captured via Projects ID#54489, #91923); $4.7 billion syndicated CDB/BoC loan for the Kazakh Section of Line C (captured via Projects ID#39997, #91926); $3.5 billion syndicated CDB/BoC loan for the Uzbek Sections of Lines A and B (captured via Projects ID#91901, #91917); $1.4 billion syndicated CDB/BoC loan for the Uzbek Section of Line C (captured via Projects ID#54528 #91898); $300 million CNPC Finance loan for Tajik Section of Line D (captured via Project ID#39955); and $300 million equity investment from Trans-Asia Gas Pipeline Company Limited for Line D of the Central Asia-China Gas Pipeline Project (captured via Project ID#70616). 11. The individual contributions of China Development Bank and Bank of China to the $3.5 billion syndicated loan are unknown. For the time being, AidData estimated the individual contributions of each Chinese state-owned bank by assuming that the two lenders contributed equal amounts ($1.75 billion) to the loan syndicate.

Number of official sources

19

Number of total sources

43