Nanhai
China Infrastructure Development Award 2002
Nanhai Petrochemicals
The Shell Nanhai project ? in its final stages as this report went to press? is one of the largest Sino-foreign petrochemical projects in Chinese history. It has a cost of $4.6 billion and involves ECAs, international commercial lenders and domestic lenders. It is being done as a ?true' project financing. Those close to the project say it will reach full close on 14 March, and already has underwriting commitments.
The Nanhai petrochemicals plant is sponsored by a 50/50 joint venture of China National Offshore Oil Corporation (CNOOC) and Shell. It has taken about 12 years to come to market and has the backing of the Chinese government due to its output ? petrochemicals are largely imported at the moment.
Eleven banks joined the transaction as mandated arrangers. It has a mainly international flavour, although three of China's biggest banks are in the group. The banking group comprises ANZ Banking Group Ltd, Bank of Tokyo Mitsubishi, Credit Agricole Indosuez, China Development Bank, Bank of China and Industrial Commercial Bank of China, Mizuho Corporate Bank, Hong Kong and Shanghai Banking Corporation Ltd, IntesaBci SpA, Sumitomo Mitsui Banking Corporation and WestLB. The financing package is split into renminbi and dollar tranches on a 60/40 debt to equity basis.
Debt is around $2.7 billion (this does not include standby and working capital facilities). It is split roughly into a $1.6 billion RMB tranche led by the Chinese banks for 18 years, and a $1.1 billion tranche with the international banks for 13 years. There is ECA involvement in this tranche over 17 years ? quite far out ? and US Ex-Im, JBIC, Hermes, NCM, Nexi and Sace are thought to be providing guarantees.
A lawyer close to the deal says: ?This is a huge project and the documentation is quite time-consuming. It has some quite aggressive features and is something that has the full attention of central government. With all the processes that sponsors and lenders have to go through, I think to a certain extent these things warrant the success of the project.
?In such a new market there is bound to be doubt and suspicion, but the GDP is growing by 9% which makes for a successful project.?
There is no offtaker in this project, and so those involved in the deal are exposed to market risk of selling the product to end-users. But China has the market for this ? it has been a huge importer of petrochemicals and, as one lender says, ?looking at this from the commercial point of view, this is the reason for its future success?.
Nanhai Petrochemicals' plant will produce ethylene, styrene monomer, propylene oxide, mono-ethylene glycol, polypropylene and polyethylene.
CNOOC Shell Petrochemical Company
Status: Underwritten, full close expected at time of going to press
Location: Guangdong Province, China
Size: $4.6 billion
Sponsors: Shell, CNOOC
Debt: $2.7 billion
Arrangers: ANZ, Bank of Tokyo-Mitsubishi, Credit Agricole Indosuez, China Development Bank, Bank of China and Industrial Commercial Bank of China, Mizuho Corporate Bank, HSBC, IntesaBci, Sumitomo Mitsui Banking Corporation and WestLB
Financial advisor: IntesaBci
Lawyers to the sponsors: Allen & Overy
Lawyers to the lenders: Latham & Watkins
Market advisor: Nexant Chemical Systems
Technical consultant: Kvaerner
Construction: Bechtel, Foster Wheeler, SEI
Back to contents
Nanhai Petrochemicals
The Shell Nanhai project ? in its final stages as this report went to press? is one of the largest Sino-foreign petrochemical projects in Chinese history. It has a cost of $4.6 billion and involves ECAs, international commercial lenders and domestic lenders. It is being done as a ?true' project financing. Those close to the project say it will reach full close on 14 March, and already has underwriting commitments.
The Nanhai petrochemicals plant is sponsored by a 50/50 joint venture of China National Offshore Oil Corporation (CNOOC) and Shell. It has taken about 12 years to come to market and has the backing of the Chinese government due to its output ? petrochemicals are largely imported at the moment.
Eleven banks joined the transaction as mandated arrangers. It has a mainly international flavour, although three of China's biggest banks are in the group. The banking group comprises ANZ Banking Group Ltd, Bank of Tokyo Mitsubishi, Credit Agricole Indosuez, China Development Bank, Bank of China and Industrial Commercial Bank of China, Mizuho Corporate Bank, Hong Kong and Shanghai Banking Corporation Ltd, IntesaBci SpA, Sumitomo Mitsui Banking Corporation and WestLB. The financing package is split into renminbi and dollar tranches on a 60/40 debt to equity basis.
Debt is around $2.7 billion (this does not include standby and working capital facilities). It is split roughly into a $1.6 billion RMB tranche led by the Chinese banks for 18 years, and a $1.1 billion tranche with the international banks for 13 years. There is ECA involvement in this tranche over 17 years ? quite far out ? and US Ex-Im, JBIC, Hermes, NCM, Nexi and Sace are thought to be providing guarantees.
A lawyer close to the deal says: ?This is a huge project and the documentation is quite time-consuming. It has some quite aggressive features and is something that has the full attention of central government. With all the processes that sponsors and lenders have to go through, I think to a certain extent these things warrant the success of the project.
?In such a new market there is bound to be doubt and suspicion, but the GDP is growing by 9% which makes for a successful project.?
There is no offtaker in this project, and so those involved in the deal are exposed to market risk of selling the product to end-users. But China has the market for this ? it has been a huge importer of petrochemicals and, as one lender says, ?looking at this from the commercial point of view, this is the reason for its future success?.
Nanhai Petrochemicals' plant will produce ethylene, styrene monomer, propylene oxide, mono-ethylene glycol, polypropylene and polyethylene.
CNOOC Shell Petrochemical Company
Status: Underwritten, full close expected at time of going to press
Location: Guangdong Province, China
Size: $4.6 billion
Sponsors: Shell, CNOOC
Debt: $2.7 billion
Arrangers: ANZ, Bank of Tokyo-Mitsubishi, Credit Agricole Indosuez, China Development Bank, Bank of China and Industrial Commercial Bank of China, Mizuho Corporate Bank, HSBC, IntesaBci, Sumitomo Mitsui Banking Corporation and WestLB
Financial advisor: IntesaBci
Lawyers to the sponsors: Allen & Overy
Lawyers to the lenders: Latham & Watkins
Market advisor: Nexant Chemical Systems
Technical consultant: Kvaerner
Construction: Bechtel, Foster Wheeler, SEI
Back to contents
Request a Demo
Interested in IJGlobal? Request a demo to discuss a trial with a member of our team. Talk to the team to explore the value of our asset and transaction databases, our market-leading news, league tables and much more.