China Construction Bank contributes to $1 billion USD syndicated loan for the Dolphin Gas 2005 Refinancing Project

Project narrative

On September 11, 2005, a syndicate of 14 banks — including China Construction Bank corporation (CCB) — entered into a $1 billion USD syndicated Islamic finance facility agreement with Dolphin Energy Limited LLC — a gas company special purpose vehicle (SPV) incorporated in Abu Dhabi, United Arab Emirates jointly owned by Mubadala Investment Company PJSC, an investment vehicle of the Government of Abu Dhabi in the United Arab Emirates (51% stake), French oil and gas company Total S.A. (24.5% stake), and American oil and gas firm Occidental Petroleum Corporation (24.5% stake) — for the Dolphin Gas 2005 Refinancing Project. This facility carried a maturity period of four years and an interest rate of LIBOR plus an initial margin of 35 basis points (bps) for the first two years and then 45 bps for the final two. This facility was Shariah compliant and structured as an Istisna'a transaction, in which the borrower enters into an agreement to construct the portion of the project relating to the transportation system on behalf of the Islamic investors, and enters into a Forward Lease Agreement for the use of those assets. This loan was secured (i.e. collateralized). The project sponsors provided guarantees for the loan facility. The $1 billion USD Islamic debt was part of a $3.45 billion USD bridge loan, including a $2.45 billion USD four-year conventional bank facility signed in July 2005 that did not feature Chinese banks. The proceeds of $1 billion USD Islamic debt and the $2.45 billion USD conventional bank facility were to be used to refinance the original $1.36 billion USD five-year loan from 2004 supporting the construction of the Dolphin Gas Project — the first cross-border gas project in the Gulf Arab region — which involved the development of natural gas reserves from Qatar's offshore North Field with 24 wells, two production platforms, twin sealines, then a processing plant onshore at Qatar's Ras Laffan Industry City, and then the transportation by a sub-sea export pipeline of up to 3.2 billion cubic feet a day (bcf/d) capacity of refined natural gas to Al Taweelah in the United Arab Emirates and a further connection to Oman. The project was launched in May 2008, with the transportation of the dry gas by sub-sea export pipeline from Qatar to Al Taweelah beginning in July 2007. Dolphin had a contract to pump two billion cubic feet of gas daily, equivalent to approximately about 330,000 barrels of crude oil daily through its 364 kilometer pipeline from Qatar. Oman receives 200 million cubic feet of gas daily. Abu Dhabi Water & Electricity Authority (ADWEA), Union Water & Electricity Authority (UWEC), and Dubai Supply Authority (DUSUP) all signed 25-year supply agreements with the project. Oman Oil Company (OOC) joined in 2008. QatarEnergy signed a long-term offtake contract for ethane from the project's gas processing facility. Record ID#99030 captures CCB's contribution. In addition to CCB, the following lenders contributed to the $1 billion USD syndicated loan: ABN AMRO Bank N.V., Citigroup, Dubai Islamic Bank (DIB), Gulf International Bank (GIB), Barclays Bank, Commercial Bank of Qatar, Export Development Canada (EDC), HSBC Amanah, Natexis Banques Populaires, Sanpaolo IMI S.p.A., Société Générale Corporate and Investment Banking (SGCIB), and WestLB AG. ABN AMRO served as security trustee. BNP Paribas served as documentation agent. Citigroup served as bookrunner. DIB served as bookrunner. GIB served as facility agent. ABN AMRO, BNP Paribas, Citigroup, DIB, and GIB served as mandated lead arrangers. The $2.45 billion USD loan was provided by the following 20 lenders: Abu Dhabi Commercial Bank (ADCB) as documentation bank; Barclays as co-documentation bank; First Abu Dhabi Bank (FAB) as onshore security trustee; HSBC as offshore security trustee; National Bank of Abu Dhabi as facility agent; Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), Bayerische Landesbank (BayernLB), Calyon, EDC, Mizuho Bank, Qatar National Bank (QNB), Royal Bank of Scotland (RBS), Société Générale S.A., Sumitomo Mitsui Banking Corporation (SMBC), WestLB, and all previously mentioned banks acted as mandated lead arrangers (MLAs); Arab Banking Corporation (Bank ABC), Arab Bank, BNP Paribas, Lloyds Bank, and Standard Chartered Bank served as additional lenders. This was the largest ever Islamic facility for a structured oil and gas financing in the Middle East. Then, on July 24, 2009, a syndicate of 26 banks — including the Industrial and Commercial Bank of China (Middle East) Limited (ICBC Middle East) — signed a $1.42 billion USD syndicated senior (loan) facility agreement with Dolphin Energy Limited LLC for the Dolphin Gas 2009 Refinancing Project. The loan carried a ten-year maturity and 6-month grace period. The loan was repayable in semi-annual installments commencing on December 15, 2009, while the final maturity date of the loan was June 15, 2019. The loan had a variable interest rate over its ten-year term: from years 1 to 3, interest was LIBOR plus 275 basis points; from years 4 to 6, interest was LIBOR plus 300 basis points; and from years 7 to 10, interest was LIBOR plus 350 basis points. Interest on overdue amounts was payable at a rate of 1% above the set interest rate. This loan was the $1.42 billion USD commercial loan tranche of the $4.113 billion USD debt package that included a $1.25 billion 10-year bond, a $218 million USD 10-year SACE-insured tranche, and $1.225 billion USD in loans provided by Total and Occidental Petroleum Corporation. Some of the funds were to be used to partially fund the construction of the Taweelah Fujairah pipeline, an onshore pipeline system in the United Arab Emirates. The main proceeds were used to refinance the 2005 Dolphin Gas project debt, the $2.45 billion USD of four-year commercial debt and the $1 billion USD Islamic finance facility. Record ID#89704 captures ICBC's contribution.