Amur GPP bank mandates by month-end

Gazprom Pererabotka Blagoveshchensk – sponsor of the Amur gas processing plant (GPP) project – will mandate banks at a meeting in Moscow at the end of January for the heavily ECA-backed €13 billion ($15.6 billion) project financing. RFPs were launched in June 2018, ECAs and lenders finalised commitments in December, and financial close is expected over the coming months.

Financed on a debt-to-equity ratio of 70:30, the €19 billion project in the Svobodnensky District of the Amur Region in eastern Russia will send East Siberian gas to the border in China. Chexim and China Development Bank (CDB), with the latter said to be providing a renminbi denominated tranche, are back in the deal. European ECAs Euler Hermes, Sace, and Exiar have also been confirmed. 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 as legal counsel to 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 (KfW IPEX also recently joinined the facility); and 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.

The scheme, 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.