A refining and petrochemical joint venture between Exxon Mobil Corp., Saudi Arabian Oil Co. and China Petroleum & Chemical Corp., known as Sinopec, said Thursday it has raised around CNY30 billion ($4 billion) in funding.
The partners in Fujian Refining & Petrochemical Co., which will upgrade and triple the capacity of a refinery in Quanzhou city to 240,000 barrels a day, said it represented the largest-ever project financing for a Sino-foreign joint venture in China.
Funding was provided by a group of 11 Chinese banks plus Sinopec's finance arm, according to a statement issued by Exxon Mobil following a signing ceremony in Beijing.
International banks that had competed in the tendering process weren't picked to join the lender group.
Debt was arranged on a limited recourse basis, comprising both long-term and working capital facilities denominated in yuan and US dollars, Exxon Mobil said.
Using project financing means lenders can be repaid only from revenues generated by the project itself, and can't go after the ultimate owners in the event of default.
Project financing is often used for large, standalone energy or infrastructure projects, though the complexity and riskiness of the deals mean they aren't as common in Asia as elsewhere in the world.
Tenor for the long-term facilities will be 20 years for the yuan-denominated debt and 15 years for dollar-denominated loans, Exxon said.
The group of lenders comprises China Construction Bank Corp., Industrial and Commercial Bank of China Ltd.(stock code: 601398), Agricultural Bank of China, Bank of China Ltd..(stock code:601988), China Development Bank, Industrial Bank Co.(.(stock code: 601166), Bank of Communications Co.(stock code:601328), China Citic Bank Corp. Ltd..(stock code:601998), China Everbright Bank Co., China Merchants Bank Co..(stock code:600036), and China Minsheng Banking Corp.(stock code:600016).
Sinopec, Exxon and Saudi Arabian Oil, also known as Aramco, signed a contract for the integrated refinery project in the southern province of Fujian in February after years of talks. Agreement was reached despite China's policy of capping pump prices, which have brought losses to Chinese refiners because they cannot pass on high crude costs to consumers.
Sinopec will own 50% of the joint venture, with Aramco and Exxon holding 25% each. The refinery will primarily process sour Arabian crude supplied by Aramco.
It also involves the construction of an ethylene steam cracker with a capacity of 800,000 metric tons a year, a polyethylene unit with a capacity of 800,000 tons a year, a polypropylene unit with a capacity of 400,000 tons a year and an aromatics complex to produce 700,000 tons a year of paraxylene.
Support facilities including power generators and a berth capable of handling tankers with a capacity of 300,000 deadweight tons will also be built.
Exxon said Thursday that funding for the companies' fuels marketing joint venture has also been finalized. The equivalent of 3.3 billion yuan in debt came from yuan-denominated working capital and long-term facilities provided by two Chinese banks.
The marketing joint venture - known as Sinopec SenMei (Fujian) Petroleum Co. - will manage and operate around 750 filling stations and a network of terminals in Fujian.
Sinopec will hold 55% of this venture, with Exxon and Aramco owning 22.5% each.