Amur gas to mandate European banks in April
Gazprom Pererabotka Blagoveshchensk – sponsor of the Amur gas processing plant (GPP) project – is expected to mandate European banks at the beginning of April (2019) for the heavily ECA/DFI-backed project financing.
The €19 billion ($21.3 billion) project in the Svobodnensky District of the Amur Region in eastern Russia is to be financed on a debt-to-equity ratio of 70:30, with the €13 billion debt package said to have a tenor of 14-years plus construction.
The deal is set to include European ECAs Euler Hermes, SACE and Exiar, as well as having a strong Chinese presence with Chexim and China Development Bank on the deal (the latter is to provide a renminbi denominated tranche). ING Bank is acting as financial adviser to the EU-based ECAs. Herbert Smith Freehills is providing legal counsel to the sponsor and Freshfields Bruckhaus Deringer is acting for the lenders.
The deal comprises three debt packages to fund EPC contracts: a €4 billion facility will fund Marie Tecnimont’s join venture with China’s Sinopec to supply equipment for the project, with Sace backing around €1 billion; a €3 billion partially Hermes-covered facility will back a contract with Linde for the procurement of the gas cracker with KfW IPEX also part of the facility. The deal also includes a €5 billion facility to fund the purchase of equipment from China National Petroleum Corporation (CNPC), with funds coming from Chinese banks partially backed by Chexim.
Financial close is expected in H2 2019, but this is dependent on the Chinese portion of the financing which is expected to take longer than the European portion. The deal is said to have encountered hurdles in terms of US sanctions, which has caused caution among banks looking to finance the scheme.
The project, which will mostly extract ethane and helium for petrochemical and other industries, will have six production lines, each of which will be an independent gas processing facility with annual capacity of 7bn cubic metres. Two process lines will come online at first start-up, while the other four will be consecutively built and put in operation later. With a final design capacity of 42bn cubic metres of gas per year, GPP will be the largest of its kind in Russia and one of the largest in the world. Construction started in the summer of 2015 and the first foundation was laid last month. Construction management has been mandated to NIPIGAZ, part of Sibur.
