China Eximbank contributes to $4.6 billion syndicated loan for Amur Gas Chemical Complex Construction Project (Linked to Project ID#90926, #92661, #92662, and #92663)

On June 6, 2019, SINOPEC and SIBUR signed a framework agreement for the Amur Gas Chemical Complex Construction Project, which established a special purpose vehicle (SPV) known as Amur Gas Chemical Complex LLC (AGCC) (Амурский газохимический комплекс (АГХК). AGCC is a joint venture of Sinopec (40% ownership stake and SIBUR 60% ownership stake. It secured a $1.5 billion bridge loan from a syndicated of Russian banks in December 2020. Then, sometime between December 1-8, 2021, AGCC signed a series of syndicated loan agreements worth $9.1 billion with Chinese and non-Chinese banks for the Amur Gas Chemical Complex Construction Project: a $1.201 billion, 14-year loan from Societe Generale, Deutsche Bank, Credit Agricole Group, Intesa Sanpaolo, Citigroup, DZ Bank, Helaba, and Unicredit backed by a Euler Hermes insurance policy; a $964.36 million, 14-year loan from Unicredit, Societe Generale, Deutsche Bank, Credit Agricole Group, Cassa Depositi e Prestiti, and Intesa Sanpaolo backed by a SACE insurance policy; a $2.064 billion loan from Gazprombank, Sberbank, Otkritie FC Bank, and Alfa-Bank without an insurance policy; and a $4.6 billion loan from China Development Bank (CDB), China Eximbank, Bank of China (BoC), China Construction Bank (CCB), and the Industrial and Commercial Bank of China (ICBC) without an insurance policy. The loan from CDB, China Eximbank, BoC, CCB, and ICBC carries the following borrowing terms: a 15-year maturity, an annual interest rate of LIBOR plus a 2.6% margin, and a default (penalty) interest rate of 2%. The lenders have a formal security interest in a special bank (collateral) account, which was established on December 13, 2021 by AGCC (pledgor) and Gazprombank (account bank). The Chinese state-owned bank contributions to the $4.6 billion syndicated loan are captured by the following Project IDs: CDB via Project ID#90926; China Eximbank via Project ID#92660, BOC via Project ID#92661, CCB via Project ID#92662, and ICBC via Project ID#92663. The purpose of the project is to construct a petrochemical project, located in the Amur Region, close to the Chinese border in Russia. It involves the construction of a basic polymer production facility with a combined capacity of 2.7 million metric tons per year (MMt/y), comprising 2.3 MMt/y of polyethylene (PE) and 400,000 metric tons of polypropylene (PP). Upon completion, the plant will have one pyrolysis plant that can generate 2.7 million tons a year of ethylene and propylene, one plant for producing 0.4 million tons of polypropylene a year, three units producing a total of 1.8 million tons of polyethylene, one butene-1 production plant for producing 0.0555 million tons a year, 1 plant for the production of polyethylene with a capacity of 0.5 million tons per year, and OZH facilities and infrastructure. The Amur Gas Chemical Complex Construction Project is closely related to the Chinese bank-financed Amur Gas Processing Plant Construction Project (captured via Project ID#66306, #92611, and #92612), which will provide the raw material for the Amur Gas Chemical Complex, including two million tons of ethane fraction a year. NIPIGAS (НИПИГАЗ) is the general design contractor for the construction of the Amur Gas Chemical Complex. It has worked in a consortium with Linde to procure pyrolysis units. On May 5, 2020, Technimont S.p.A. — a subsidiary of Maire Technimont — signed an EPSS (Engineering, Procurement and Site Services) contract worth EUR 1.2 billion with AGCC. Technimont S.p.A is the leader of a consortium that includes MT Russia LLC, Sinopec Engineering Inc. and Sinopec Engineering Group Co., Ltd Russian Branch. The project’s groundbreaking ceremony took place on August 18, 2020. By the end of March 2022, the project had achieved a completion rate of 37.8%. However, in March 2022, Linde suspended its involvement in the project after Russia's February 2022 invasion of Ukraine. Then, in April 2022, SIBUR and Sinopec announced plans to ‘revise’ their strategy for the project in the wake of new sanctions on Russia. The project’s originally expected completion date was May 2024. There are some indications that the Amur Gas Chemical Complex Construction Project has financially underperformed vis-a-vis the original expectations of its lenders. In February 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Directive 3 Under Executive Order 14024, which prohibited U.S. persons from engaging in all transactions in, provision of financing for, and other dealings in new debt of greater than 14 days maturity and new equity issued by 13 Russian state-owned enterprises and entities, as well as their subsidiaries, on or after March 26, 2022. The entities included Transneft, Sberbank, AlfaBank, Credit Bank of Moscow, Gazprombank, Russian Agricultural Bank, Gazprom, Gazprom Neft, Rostelecom, RusHydro, Alrosa, Sovcomflot, and Russian Railways. Then, on March 5, 2022, the Russian Government issued Presidential Decree No. 95, which required that Russian borrowers make payments to foreign creditors from ‘unfriendly states’—including most countries that imposed sanctions on Russia for its invasion of Ukraine—in Russian rubles (irrespective of the currency of the loan), unless a permission to make direct payments in the contractual currency was granted by either the Central Bank of the Russian Federation (CBR) or Russia’s Ministry of Finance. This measure made it substantially more difficult for Russian borrowers to make timely payments on foreign- and local-currency debt to certain international creditors in their original currencies of denomination. Then, in June 2022, the Russian Government defaulted on some of its dollar-denominated and euro-denominated debt. The fact that two of AGCC's lenders (Sberbank and Gazprombank) faced international sanctions in 2022 and 2023 also reportedly complicated the implementation of the Amur Gas Chemical Complex Construction Project.

Additional details

1. AidData has estimated the all-in interest rate by adding 2.6% to average 6-month LIBOR in December 2021 (0.306%). 2. The exact size of CDB, China Eximbank, CCB, BOC, and ICBC's financial contributions to the $4.6 billion syndicated loan are unknown. For the time being, AidData assumes that all 5 members of the lending syndicate contributed equal amounts ($920 million). 3. SIBUR (PJSC SIBUR Holding) is a privately owned Russian petrochemicals company founded in 1995 and headquartered in Moscow. SIBUR is the largest integrated petrochemicals company in Russia and one of the fastest-growing companies in the global petrochemicals industry. Company purchases hydrocarbons and processes them into plastics, rubbers and other high value added products. As of December 2019, the ownership of SIBUR was as follows: Leonid Mikhelson, 48.5%; Gennady Timchenko, 17.0%; current and former managers of SIBUR Holding, 14.5%; Sinopec, 10%; Silk Road Fund, 10%. 4. This project is also known as the Amur Gas Petrochemical Complex Project. The Russian project title is Амурский газохимический комплекс (АГХК). The Chinese project title is 阿穆尔天然气化工 or 阿穆尔天然气化工厂建设项目 or 俄罗斯阿穆尔天然气化工(AGCC)乙烯ISBL项目 or 阿穆尔天然气化工综合体项目 or Sibur超级石化项目. 5. Some sources suggest that this project may have been suspended due to the international sanctions placed on Russia in 2022. This issue warrants further investigation. For now, AidData has status-coded the project a ‘Implementation’. 6. This project is closely related to Project ID#66306, #92611, and #92612, the Amur Gas Processing Plant (GPP). Coders should be careful not to confuse/conflate the two projects, as the Amur Gas Chemical Complex Construction Project is often simply abbreviated as GCC. Additionally, the projects share three contractors: NIPIGAS, Linde, and Maire Technimont. 7. Portland Advisers served as financial advisers to China Eximbank, CDB and SACE. 8. The special bank (collateral) account was established on December 13, 2021 by AGCC (pledgor) and Gazprombank (account bank). A pledge of rights agreement granted the Chinese lenders a formal security interest in the special bank (collateral) account on December 15, 2021. 9. Bank of China was selected as the security agent (i.e. collateral agent) for the loan. When lenders take collateral as security for their loans, a collateral/security agent is often appointed to enforce rights against the collateral in the event of the borrower's default under the loan.

Number of official sources

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