Bank of China contributes to $700 million syndicated loan tranche for Jambaran Tiung Biru (JTB) Gas Unitization Field Development Project (Linked to Project ID#92453)

On August 5, 2019, Pertamina EP Cepu (PEPC) — a subsidiary of the Indonesian state-owned enterprise Pertamina (Persero) — signed a $1.846 billion syndicated loan agreement with a group of 11 lenders. Participants in the loan syndicate included MUFG, SMBC, Bank of China, DBS, Intesa Sanpaolo, CIMB, Maybank, Bank Mandiri, Bank Negara, Bank Rakyat Indonesia, and Bank Tabungan Pensiunan Nasional. The loan has four tranches: a $1.04 billion commercial tranche with a 10 year maturity that is priced all-in at Libor plus 315 basis points (captured in project#92453), a $700 million commercial tranche with a 15 year maturity that is priced all-in at Libor plus 315 basis points (captured in project#), a $40 million Islamic tranche with a 15 year maturity and unknown interest rate, and a $60 million Islamic tranche with a 10 year maturity and unknown interest rate. MUFG was financial advisor and facility agent for the deal and was joined in the commercial lender lineup by SMBC, Bank of China, DBS, Intesa Sanpaolo, CIMB, Maybank, Bank Mandiri, Bank Negara, Bank Rakyat Indonesia and Bank Tabungan Pensiunan Nasional (BTPN). MUFG (Malaysia) Berhad was wakala investor for both Islamic tranches. The loan comes with no recourse to PEPC’s parent company (Pertamina or guarantees from the Indonesian government. However, it is collateralized in a de facto sense. It benefits from a trustee borrowing scheme (TBS), which was first developed and employed by Pertamina and its production-sharing contractors in 1984. The TBS is a proven and tested financing structure with a track record of successful implementation in Indonesia for over 30 years. Lenders draw comfort from this well-established structure, without the need for a traditional security package. Under the TBS, loans are repaid by a trustee from an agreed portion of proceeds under identified revenue contracts. Lenders look solely to this source of debt service for payment, with no recourse to the project and no security interest in the project assets or contracts. The trustee (HSBC Bank USA, in the case of the JTB Project) is the borrower under the loan agreements with the lenders, and debt service payments are made from trust accounts or accounts held in the name of the trustee on trust for the lenders and PEPC as the trust beneficiaries, in New York. In the JTB Project, Pertamina as offtaker will pay PEPC’s portion of the gas and condensate revenues to the trust accounts directly. These revenues will be paid by the trustee to the lenders for repayment of principal and interest (or fixed investment return in the case of the Islamic finance tranches). This source of debt service functions as the primary security for the lenders. The Jambaran Tiung Biru (JTB) Gas Unitization Field Development Project involves the development of proven gas reserves, as well as the construction and operation of a gas processing facility and pipelines. It is located in the unitised Jambaran Tiung Biru field (JTB field) in Bojonegoro Regency, East Java Province, Indonesia. The project is supported by gas sales of up to 192 million standard cubic feet per day under a long-term, fixed-price and fixed-volume take-or-pay gas sales agreement with the offtaker, Pertamina. The development scope covers the drilling of six development wells that will produce 315m standard cubic feet per day of raw gas, the designing and installing of gas processing facilities with a maximum capacity of 330m standard cubic feet per day and the development of gas flow lines from the wells to the gas processing facilities and sales gas pipelines from the gas processing facilities to a gas transmission pipeline. The gas will be channelled through the Gresik-Semarang transmission pipeline – managed by PT Pertamina Gas (Pertagas) – to Central and East Java: the Tambak Lorok Gas and Steam Power Plant (PLTGU) in Central Java and the Java-3 PLTGU in East Java will both be fueled by the project. JGC Corporation and PT Rekasaya Industri are EPC contractors responsible for project implementation. Project completion was originally scheduled to occur by the end of the last quarter of 2021. However, this project has faced implementation delays due to the Covid-19 pandemic.

Additional details

1. The exact size of Bank of China’s contribution to the $1.04 billion loan tranche and the $700 million loan tranche is unknown. For the time being, AidData assumes that all 11 members of the lending syndicate contributed equally ($94,545,454) to the $1.04 billion loan tranche. AidData also assumes that all 11 members of the lending syndicate contributed equally ($63,636,363) to the $700 loan tranche. 2. AidData has estimated the all-in interest rate of the $1.04 billion loan tranche and the $700 million loan tranche by adding 3.15% to average 6-month LIBOR in August 2019 (2.057%). 3. Effective November 3, 2017, PEPC acquired an additional 41.37% participating interest in the JTB unitization field previously held by ExxonMobil Cepu Limited and Ampolex (Cepu) Pte. Ltd., increasing the Company’s participating interest in JTB unitization field to 82.74%. The other contractors in JTB field are PT Pertamina EP with 8.06% and Badan Usaha Milik Daerah (“BUMD”) with 9.19%. Through Letter No. 001/KETUA-BKS/XI/2017 dated November 17, 2017 and Letter No. 004/KETUABKS/XII/2017 dated December 19, 2017, Cooperating Body Participating Interest Block (“PI BKS”) Cepu conveyed the resignation of 4 Members of the PI BKS Cepu Block namely PT Asri Dharma Sejahtera (“ADS”), PT Sarana Patra Hulu Cepu (“SPHC”), PT Blora Patragas Hulu (“BPH”), PT Petrogas Jatim Utama Cendana (“PJUC”), which the four members stated they would not participate in the development of the Jambaran-Tiung Biru Field Gas project (“JTB”) starting January 1, 2018. Effective January 1, 2018, the Company added a 9.19% participating interest in the JTB unitization field previously owned by the PI BKS (ADS, SPHC, BPH, PJUC) so that the Company's participating interest in the JTB unitization field becomes 91.93%. Payment for this acquisitions totaled to US$16,764. The acquisitions of this participating interests was recorded as an additional oil and gas assets. 4. Financial adviser: MUFG Sponsors’ legal advisers: Latham & Watkins (International), UMBRA (Local) Lenders’ legal advisers: Milbank (International), Ali Budiardjo Nugroho Reksopdiputro (Local) Trustee: HSBC. 5. This project is also known as the Jambaran-Tiung Biru Project. 6. Pertamina (Persero) will offtake 100% of the gas produced from the JTB field on a 90% take-or-pay basis throughout the project life at a fixed price

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