Alliance Oil subsidiary OJSC Khabarovsk Re­finery signed a $770 million 12.5-year project financing with Vnesh­econombank (VEB) on 9 August 2010. The deal employs the same structure as VEB’s Tobolsk Polymer transaction and backs the refinery’s modernisation programme.

VEB is borrowing and on-lending the debt from a club of commercial banks – com­pris­ing BBVA, BNP Paribas, Credit Agricole, La Caixa, Societe Generale and Banesto – under two Cesce-backed facilities and a commercial loan.

The three-tranche deal comprises a $239 million and a Eu218 million tranche, both backed by Cesce, and a $233.2 million com­mercial loan. The first two tranches are re­paid over 10 years in equal semi-annual instal­ments with a two-year grace period. The third tranche is repaid over nine years with a grace period until January 2014.

The modernisation project launched in November 2007 when Khabarovsk signed a number of contracts with Spanish com­panies for the implementation of the programme, with Tecnicas Reunidas taking the leading role.

The project includes the construction of a hydro fining and hydro cracking unit, the reconstruction of a catalytic reforming unit, the upgrade of the existing facilities to be integrated with the new installations and construction of a visbreaking unit.

The specific capacities are: hydrocracker 10,560 bpsd; Diesel hydrotreater 26,500 bpsd; hydrogen pro­duction unit 30,140 Nm3/h; amine regeneration unit 74 Nm3/h; sour water stripper 14,5 Nm3/h; sulphur recovery unit 2 x 20 tpd.

The modernisation will enable the refinery to capture higher margins on sales of oil products and to preserve its position in dom­estic and international markets by complying with international standards. The project is also expected to benefit from the proposed construction of the Eastern Siberia Pacific Ocean pipeline (ESPO Pipe­line) that would link Khabarovsk to Trans­neft’s pipeline, resulting in decreased costs.

At completion Alliance expects Khabar­ovsk to have a nameplate capacity close to 90,000 bpd and a Nelson complexity index of 9.9, up from 3.4, with an improvement in the depth of refining from 61% to 93%. The programme is scheduled to be completed in 2012. 

Status: Signed 9 August 2010
Description: Refinery modernization programme
Sponsor: Alliance Oil
ECA: Cesce
On-lending bank: Vnesheconombank
Commercial lenders: BBVA, BNP Paribas, Credit Agricole, La Caixa, Societe Generale, Banesto
Management and engineering services: Foster Wheeler
EPC: Tecnicas Reunidas