CDB participates in RMB 850 million syndicated loan for Phase 1 of the Lao-China Oil Refinery Project

In September 2014, Laos-China Dongyan Petrochemical Co., Ltd. (LCPC or 老中东岩石化股份有限公司) was legally incorporated as a special purpose vehicle and joint venture of Yunnan Dongyan Industrial Co., Ltd. (75% ownership stake), Lao State Fuel Company (20% ownership stake), and Lao-China Joint Investment Co., Ltd. (5% ownership stake). The Yunnan Branch of China Development Bank (CDB) organized an RMB 850 million syndicated loan to Lao-China Dongyan Petrochemical Co Ltd for Phase 1 of the Lao-China Oil Refinery Project. The borrowing terms of the loan are unknown. However, it is known that the project encountered ‘funding problems’ in October 2015 and it was temporarily suspended. Phase 1 involved the construction of a petrochemical refinery with a production capacity of 1-million tons per year (tpy). The refinery is located within the energy and chemical district of the Vientiane Saysettha Development Zone (VSDZ) in Vientiane. Sitting on over 218,677 square meters, the project’s first phase also involved the construction of three buildings and 16 oil tanks with a total storage capacity of 80 million liters. Luoyang Ruize Petrochemical Engineering Limited Company (RPEC) was the contractor responsible for project implementation. On November 25, 2014, a formal groundbreaking ceremony took place. Then, on April 8, 2015, the deputy prime ministers of the Lao government visited the project site to attend the project commencement ceremony. As of December 2016, the project had achieved a 35% completion rate. At that time, the project was scheduled to reach completion in November 2017. An equity share transfer agreement was signed on March 1, 2017, which changed the ownership structure of LCPC such that Yunnan Provincial Overseas Investment Co. Ltd. holds a 59% ownership stake, Yunnan Dongyan Industrial Co., Ltd. holds a 16% ownership stake, Lao State Fuel Company holds a 20% ownership stake, and Lao-China Joint Investment Co., Ltd. holds a 5% ownership stake. LCPC signed new articles of association and a new operating agreement on on March 10, 2017. As of August 2017, the project had achieved a 40% completion rate. Phase 1 was ultimately completed and commissioned on November 30, 2020. The refinery will produce 8,000 barrels per day (b/d) of gasoline and 10,000 b/d of diesel when it reaches full capacity (after the completion of the project’s second and third phases). The refinery, which has 500,000 tons per year (t/yr) of diesel hydrogenation capacity, is also expected produce 35,000 t/yr of LPG, 12,000 t/yr of pure benzene and 4,000 t/yr of sulphur at full capacity. The benzene and sulphur will be sold to China.

Additional details

1. The Chinese project title is 老中联合投资建设成品油精制项目 or 老挝石油化工股份有限公司300万吨/年炼化项目. 2. CDB is the only known member of the loan syndicate. For the time being, AidData assumes that all members of the syndicated loan are Chinese state-owned creditors. This issue warrants further investigation. 3. Lao Petroleum & Chemical Co. Ltd. (LCPC) is also known as Lao-China Dongyan Petrochemical Co. Ltd., Lao Petrochemical Co. Ltd., and Laos Petrochemical Co. Ltd.

Number of official sources

9

Number of total sources

19