The largest project in Colombia to date with export credit agency support, and US Ex-Ims second largest direct majority loan, the $3.5 billion debt financing for the $5 billion Refineria de Cartagena (Reficar) refinery expansion project in Colombia saw US Ex-Im provide a $2.65 billion direct loan with an all-in fixed interest rate of 4.37%, and act as guarantor for a $100 million loan from HSBC.

Originally sponsored by state-owned Ecopetrol and Glencore, Ecopetrol bought the latters 51% share in 2009 for $549 million: Glencore paid $630 million in 2006 for the stake, outbidding Brazilian state-controlled energy giant Petrobras in a public auction, but was unable to fund its share of the project due to the global financial crisis.

The project involves expansion and modernistaion of the Reficar refinery, located in the Mamonal Industrial Zone with its existing infrastructure and services, to a capacity of 165,000 barrels per day from 80,000 barrels per day.

The existing refinerys major process units include a crude/vacuum unit, fcc unit, visbreaker thermal cracking unit, catalytic polymerisation unit, kerosene/jet fuel treater and a sulphur recovery complex. The scheme will transform the refinery into a state-of-the-art facility with a Nelson complexity index of 10.5 and the ability to process a wide range of crude oils and produce a higher quality product slate, particularly ultra-low sulphur diesel that meets international standards and can therefore be sold internationally.

The financing comprises five tranches a $2.65 billion 16 year (inclusive of two year grace period) direct loan from US Ex-Im; a $100 million 16 year loan from HSBC guaranteed by US Ex-Im; a $210 million 16 year tranche from lead arrangers SMBC, BBVA, HSBC and BTMU guaranteed by Sace; a $440 million 14.25 year commercial loan from the lead arrangers; and a $100 million 16 year tranche guaranteed by EKN and provided by Nordea and $1.502 billion of equity from Ecopetrol.

The deal benefits from a number of Ecopetrol contingent guarantees against cashflow volatility: Ecopetrol will meet any Reficar deficits in debt servicing (the amount guaranteed corresponds only to the annual amount of the debt service); Ecopetrol will also assume all or part of the debt of Reficar in the event of default or deterioration of the credit; and, under certain circumstances, Ecopetrol can make an accelerated and full repayment of the Reficar debt.

Refineria de Cartagena
Status: Financial close 30 December 2011
Description: Development of a 150,000 bpd crude refinery in Colombia
Total project cost: $5 billion
Total debt: $3.5 billion
Sponsor: Ecopetrol
Financial adviser: BNP Paribas
Lead arrangers: BBVA, HSBC, BTMU, SMBC
Arranger: Nordea (SEK)
ECAs: US Exim, Sace, EKN
US Exim adviser: Portland Advisers
Lender legal counsel: Milbank
Sponsor legal counsel: Linklaters (international) and Brigard & Urrutia (local)
Consultants: Exponent Inc (environmental), Purvin & Gertz (market), Jacobs Consulting (technical)
EPC Contractors: Chicago Bridge & Iron