The Yamal LNG project raised €10.6 billion from Chinese banks


“Yamal LNG” signed in Beijing the agreements with the Export-import Bank of China and China development Bank on providing credit lines of €9.3 billion and 9.8 billion yuan (€1.33 billion) for a period of 15 years, the company said. Thus, in total, the company raised approximately €10.6 billion

The total cost of the project “Yamal LNG” is estimated at $27 billion the Company has invested in the project $12.8 billion, says the report of Gazprombank. Agreements with Chinese banks, together with funds from the national welfare Fund (NWF) and credit lines of Russian banks to provide the necessary project funding attracted from external sources, the report says, “Yamal LNG”. The company cannot raise funds in US dollars due to us sanctions.

Previously, Yamal LNG received from the NWF to 150 billion rubles, and a loan of €3.6 billion from Sberbank and Gazprombank for a period of 15 years also.

Yamal LNG — one of the main projects of NOVATEK. It involves the construction of a plant for production of liquefied natural gas (LNG) with a capacity of 16.5 million tons per year. The resource base for the project — South-Tambeyskoye field. The launch is scheduled for 2017. NOVATEK owns 50.1% of “Yamal LNG”, for 20% of France’s Total and China’s CNPC, the remaining 9,9% — from the Fund of the silk road (Silk Road Fund).

“The project is implemented in accordance with the approved schedule, readiness of the first stage of the LNG plant is 65%, and we are at the most intense stage of construction works”, — said General Director of “Yamal LNG” Eugene the cat (his words are in the message) . The signing of agreements with the Chinese banks allows to implement the project without additional funds from shareholders, he added.

Interest rates on new credit lines amount to EURIBOR 6M +3.3% per annum during the construction period, and 3.55% after the complete input of the project “Yamal LNG” in the operation and SHIBOR 6M +of 3.30% and 3.55% per annum respectively, says the company.

With respect to the amount and term of attraction of money of loans of Chinese banks will be “Yamal LNG” is pretty cheap, says senior portfolio Manager GHP Group Fedor Bizikov. For comparison, only two weeks ago the company attractive loans of Gazprombank and Sberbank at a rate of EURIBOR 6M +4.7 percent. Part of the decline in rates can be explained by the improved market conditions over the past month, the expert says: for example, the yield of nine-year Eurobonds of “Gazprom” declined during this period from 4.5% to 4% per annum.

The higher rate of credits in the Russian banks can be related to the fact that on the local Russian market the value of the Euro, perhaps higher than in foreign markets, adds the analyst of Raiffeisenbank Denis Poryvai.

The representative of NOVATEK did not answer the question about the conditions of loans Yamal LNG Chinese banks.

Fundraising by Chinese banks is the long anticipated news. But on Tuesday, the co-owner and CEO of NOVATEK Leonid Mikhelson very carefully commented on the timing of signing these treaties. “Go final negotiations on the loan documentation. It will be necessary to perform a number of suspensive conditions. In time [in may] it’s impossible. Perhaps it will be later”, — he said.

In early trading on the London stock exchange shares in NOVATEK rose nearly 2.5%, by 13:00 Moscow time growth was adjusted to 0.97% (13:00 GMT), market capitalization of $30,135 billion.