BTC signs project finance agreements
Posted: 03 February 2004
This release was issued in Baku today by the BTC Co
The Azerbaijan Government and BTC Co, operated by BP, today hosted
an official ceremony during which the final package of project finance
documents was signed to finance BTC construction. The signing ceremony,
which took place in the Gulustan Palace in Baku, marks the completion
of agreements covering the third party financing for the pipeline
project.
The BTC financing agreements were signed by representatives of
the Governments of the Azerbaijan Republic, the Republic of Georgia
and the Republic of Turkey and representatives from the BTC lender
group in the presence of the President of the Azerbaijan Republic,
H.E. Ilham Aliyev.
The financing package includes 208 finance documents, with over
17,000 signatures from 78 different parties, and it represents a
major milestone in the implementation of the financing arrangements
for the pipeline which will cost $2.95 billion to construct ($3.6
billion total project cost including linefill and loan interest
during construction).
Approximately 30 per cent of BTC costs are being funded by equity
contributions, while the remaining 70 per cent of the total is being
provided in the form of financing by third parties.
The BTC partners have already contributed $1 billion. The total
debt committed is $2.6 billion thus completing the funding for the
project.
The group that will provide loans, export credits and risk insurance
to BTC comprises:
- the multilateral lending agencies: the European Bank for Reconstruction
and Development (EBRD) and the International Finance Corporation
(IFC), the private sector arm of the World Bank
- the export credit agencies and political risk insurers of seven
countries: the Japan Bank for International Co-operation (JBIC)
and Nippon Export and Investment Insurance (NEXI) of Japan, the
Export-Import Bank of the United States of America, the Export
Credits Guarantee Department (ECGD) of the United Kingdom, the
Overseas Private Investment Corporation (OPIC) of the United States,
Compagnie Francaise pour le Commerce Exterieur (COFACE) of France,
Euler Hermes Kreditversicherungs-AG (HERMES) of Germany and SACE
S.p.A. – Servizi Assicurativi del Commercio Estero (SACE)
of Italy
- a syndicate of 15 commercial banks led by ABN AMRO, Citibank,
Mizuho and Société Générale with Banca
Intesa, BNP Paribas, Crédit Agricole Indosuez, Dexia, HypoVereinsbank,
ING, KBC, Natexis Banques Populaires, San Paolo IMI, West LB and
Royal Bank of Scotland
- loans provided by BP, Statoil, Total and ConocoPhillips, as
senior sponsor lenders
Finalisation of the financing agreements comes after more than
two years of far-reaching monitoring and scrutiny of the project’s
environmental and social impact, as well as a thorough public consultation
process. The loans are conditional on the project continuing to
meet its stringent public commitments – which are subject
to formal, quarterly audits by lenders.
The participation of the multilateral, export credit and insurance
agencies enhances transparency in the project, and gives them the
opportunity to influence project implementation, and to help ensure
the development potential from the projects is realised.
To date, construction work has progressed significantly with the
overall project now more than 50 per cent complete. Some 760km of
the right of way (ROW) has been prepared, 580km of pipe strung,
520km of pipe welded, 270km of the pipeline corridor trenched, 235
km of pipe lowered-in and 215 km already backfilled. Today, there
are construction activities at 17 sites in all three countries.
The pipeline employs over 12,000 people along its entire route
from Baku to Ceyhan. The project’s community investment programme
is up and running in all three countries. Overall BTC together with
the South Caucasus Pipeline (SCP) will spend some $30 million (including
$5.5 million already awarded in Azerbaijan) on community and environmental
investment between now and 2006 in Azerbaijan, Georgia and Turkey.
Background
The 1,760km BTC pipeline will allow one million barrels of oil a
day to be exported safely and responsibly from the Caspian without
increasing tanker traffic through the Turkish Straits. It is buried
for its entire length and, once constructed, land will be fully
re-instated above a narrow eight-metre right of way. Landowners
and land users have been generously compensated for disruption during
the construction phase and will be able to use their land after
construction, subject to a small number of restrictions imposed
for safety reasons.
First oil from the pipeline will be exported from the Mediterranean
port of Ceyhan in 2005.
A parallel loan covering the Phase 1 offshore development of the
Azeri-Chirag-Gunashli (ACG) oil field has also been agreed by BP,
Unocal, Statoil and Hess. The documentation providing for a series
of loans by IFC and EBRD totaling approximately $120 million became
effective today also.
The BTC export pipeline will carry oil from the ACG field from
2005. It will account for the majority of the throughput of the
pipeline during its early years of operation.
The BTC Co. shareholders are: BP (30.1 per cent); SOCAR (25.00
per cent); Unocal (8.90 per cent); Statoil (8.71 per cent); TPAO
(6.53 per cent); Eni (5.00 per cent); Total (5.00 per cent), Itochu
(3.40 per cent); INPEX (2.50 per cent), ConocoPhillips (2.50 per
cent) and Amerada Hess (2.36 per cent).
For more information see www.bp.com
Posted by Richard Price,
Editor Pipeline Magazine
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