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Overview

Bank of China contributes to $500 million syndicated oil prepayment facility with Bashneft (Linked to Record ID#66298)

Commitments (Constant USD, 2023)$109,072,157
Commitment Year•2016Country of Activity•RussiaDirect Recipient Country of Incorporation•RussiaSector•Industry, Mining, ConstructionFlow Type•Loan

Status

Project lifecycle

Implementation

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Jan 1, 2016
Last repayment
Dec 30, 2020

Geospatial footprint

Map overview

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The project provided an oil prepayment facility to Bashneft, headquartered in Ufa, Russia. More detailed locational information can be found at https://www.openstreetmap.org/way/79541020

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

  • Bank of China (BOC)

Cofinancing agencies

Private Sector

  • PJSC Rosbank
  • Société Générale S.A. (SocGen or Societe Generale)
  • Vitol Group

State-owned Commercial Banks

  • Industrial and Commercial Bank of China (ICBC)

Receiving agencies

State-owned companies

  • Bashneft OAO

Implementing agencies

State-owned companies

  • Bashneft OAO

Collateral providers

State-owned companies

  • Bashneft OAO

Loan desecription

ICBC and BOC contribution to $500 million syndicated oil prepayment facility with Bashneft

Interest type•UnknownMaturity•5 years

Collateral

The pre-export finance (PXF) facility was secured by the assignment of export contracts for oil products (through long-term offtake contract between Bashneft -- a Russian state-owned oil company -- and Vitol). 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.

Narrative

Full Description

Project narrative

In January 2016, a syndicate of banks (including ICBC, Bank of China, Société Générale, PJSC Rosbank, Vitol S.A) signed a $500 million oil prepayment facility agreement with Bashneft (a Russian state-owned oil company) under a long-term contract for the supply of crude oil and petroleum products. The oil prepayment facility had a five-year maturity and it was secured by a long-term offtake contract between Bashneft and Vitol. ICBC's contribution to the facility is captured via Record ID#66298 and Bank of China's contribution is captured via Record ID#92371. The total delivery volume was approximately 3,780,000 tons of petroleum products and/or 5,040,000 tons of crude oil in the period from the date of the contract to March 2021. The agreement stipulates pricing calculated with reference to market quotes, and prepayments are settled through physical deliveries of oil and/or petrochemical products.

Staff comments

1. Oil prepayment contracts— also known as pre-export finance (PXF) facilities — are arrangement in which an commodity (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), 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. Due to to various international sanctions imposed upon Russia, PXF facilities are one of the fews ways in which commodity producers (borrowers) can borrow in foreign currency. 2. The exact size of Bank of China and ICBC’s respective financial contributions to the $500 million syndicated loan are unknown. For the time being, AidData assumes that all 5 members of the lending syndicate contributed equal amounts ($100 million).