Yamal LNG Secures Funding from Chinese Banks

Russia’s USD 27 billion Yamal LNG project has secured financing from two Chinese banks worth a total of USD 12.1 billion.

Namely, agreements have been signed with the Export-Import Bank of China and the China Development Bank on two 15-year credit line facilities for the total amount of EUR 9.3 billion (USD 10.6 billion) and RMB 9.8 billion (USD 1.5 million) at EURIBOR 6M plus margin of 3.30% at the construction stage and 3.55% after the full commissioning of the Yamal LNG project and SHIBOR 6M plus margin of 3.30% and 3.55% respectively, Yamal LNG said.

Earlier, as part of the project financing package, Yamal LNG received financing from the National Welfare Fund of Russia in the amount of RUR 150 billion and recently signed an agreement with Sberbank and Gazprombank on a 15-year credit line for the total amount of EUR 3.6 billion.

The said financing is believed to be enough to cover the needs for external funding of the Yamal LNG project, the company said, set at up to USD 19 bn.

 “The project is progressing in accordance with the approved schedule. With the first train of the LNG plant 65% complete we are currently at the most intensive phase of construction and assembly works. Agreements with the Chinese banks allow to complete the project without additional funding by the shareholders,” General Director of Yamal LNG, Evgeniy Kot said.

The deal comes after months of talks with European and Chinese lenders and is believed to be a circumvention of Western sanctions imposed against the project leader Novatek and its major shareholder Gennady Timchenko over Ukraine.

The plan envisages construction of an LNG plant with a capacity of 16.5 million tons per annum, scheduled to start LNG production in 2017.

The cargo from Yamal, which is based on the feedstock resources of the South-Tambeyskoye field located in the north-east of the Yamal Peninsula, would be transported via ARC7 ice class LNG carriers being built for the project.

The 170,000 cbm carriers will enable year-round navigation without icebreaker support along westbound navigation routes and along the Northern Sea route during the Arctic summer.

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