VEB.RF to Provide up to EUR500mn in Financing for Amur Gas Processing Plant Construction
VEB.RF, together with a syndicate of Russian, European and Chinese lenders, has signed agreements to finance the construction of Amur Gas Processing Plant. The project is carried out by Gazprom Pererabotka Blagoveshchensk (part of Gazprom) in the Svobodny advanced development zone, Amur Region.
Gazprom Pererabotka Blagoveshchensk is to raise 11.4 billion euros from Russian, European and Chinese banks, with VEB.RF’s commitment of up to 500 million euros.
“VEB.RF’s participation in financing the construction of Amur Gas Processing Plant had an important role in preparing the offers of potential lenders: foreign and Russian financial institutions,” Gazprom’s Deputy Chairman of the Management Committee Famil Sadygov emphasised.
“VEB.RF is involved in the country’s biggest gas-processing and gas-to-chemicals projects. The construction of Amur Gas Processing Plant will enable Russia to increase its export potential, including in the potentially lucrative Asian markets. Amur Gas Processing Plant will become a world leader in helium production,” VEB.RF’s First Deputy Chairman – Member of the Management Board Nikolay Tsekhomsky said.
Amur Gas Processing Plant will be one of the world’s largest gas-processing facilities. It will play a significant role in supplying natural gas to China via the Power of Siberia pipeline.
Amur Gas Processing Plant will be constructed near the town of Svobodny, Amur Region. Its design capacity is 42 billion cubic metres of natural gas per year. The facility will include the world’s largest helium production. The project consists of six process trains. Two of them are scheduled to begin operation in 2021. The others will be put into operation in phases by the end of 2024. Therefore, it is intended that the facility will work at full capacity in 2025. Apart from natural gas and helium, Amur Gas Processing Plant will also produce ethane, propane, butane and pentane-hexane fraction. Investor and project originator: Gazprom Pererabotka Blagoveshchensk (part of Gazprom). Project manager and general contractor: NIPIGAS (part of SIBUR).
VEB.RF and Gazprombank to Provide Financing for Research Reactor Construction
VEB.RF, Gazprombank and the International Research Center based on the MBIR reactor (IRC MBIR) (part of ROSATOM) have agreed on the terms and conditions of financing for the project to construct a multipurpose research reactor (MBIR).
The project totalling almost 80 billion roubles is aimed at building a unique research facility with a fourth-generation fast-neutron reactor at Dimitrovgrad, Ulyanovsk Region. The MBIR reactor is designed to help Russia to preserve and develop its nuclear research capability. The research reactor will be used to create and test new materials and nuclear technologies. IRC MBIR will be contracted by Russian and international companies to carry out irradiation experiments and post-irradiation tests.
VEB.RF and Gazprombank will provide a total of over 20 billion roubles in project financing under the Project Financing Factory programme. In addition to debt financing, the MBIR project is to use equity financing. The transaction has already received approval from the Supervisory Board of VEB.RF.
“Nuclear power is an excellent example of high-technology industries where the Russian Federation can definitely be viewed as a world leader. The Project Financing Factory mechanism using long-term syndicated lending is ideally suited for such large-scale and capital-intensive initiatives,” VEB.RF’s Deputy Chairman Daniil Algulyan said.
“We will help to build a facility that is of not only scientific but also strategic importance for the country. I am confident that by financing the large-scale high-technology project, we help Russian science as a whole to increase its potential. Additionally, this transaction will allow us to raise to a new level our significant cooperation with VEB.RF and ROSATOM,” Gazprombank’s Executive Vice President Alexander Ushkov said.
“Signing the financing agreement for the project to construct the research facility with a multipurpose fast-neutron reactor is consistent with ROSATOM’s strategy to create the International Research Center based on the MBIR reactor. An important aspect is that ROSATOM’s largest scientific project is attractive to investors such as these leading Russian banks,” IRC MBIR’s CEO Sergey Pastukhov commented.
Launched under the federal targeted programme New Generation of Nuclear Power Technologies for 2010–2015 with Long-Term Plans Until 2020, the MBIR project is designed to renew ROSATOM’s research reactors and aimed at helping Russia to continue to be a leader in nuclear research.
First Tranche Paid by VEB.RF to Finance LNG Carrier Construction at Zvezda
VEB.RF has paid the first tranche to the Zvezda shipyard to finance the construction of the pilot LNG carrier under the Arctic LNG 2 project.
The gas tanker (ice class Arc7) is designed to transport LNG on a year-round basis in the ice-bound conditions of the Kara Sea and the Gulf of Ob. The ship has the ice-breaking capability to navigate in ice with a thickness of more than 2 metres.
The LNG carrier is to be leased to Sovcomflot. NOVATEK has already signed a long-term contract with Sovcomflot to charter the ship under the Arctic LNG 2 project.
Overall, financing for 15 gas tankers received approval from the Supervisory Board of VEB.RF. They will be supplied when Arctic LNG 2 begins operation.
The shipyard’s larger business portfolio will provide the basis for implementing the presidential decree aiming to create a cluster of shipbuilders in the Russian Far East, increase the local content of Russian-made products, build medium- and large-sized vessels, and manufacture marine equipment in order to promote the Northern Sea Route and develop Arctic hydrocarbon deposits.
“The first tranche paid for the pilot LNG carrier is 66 million US dollars, or an amount equivalent to about 4.2 billion roubles. This year, VEB.RF has already disbursed an amount equivalent to over 9 billion roubles in total to finance the construction of four tankers at the Zvezda shipyard. Support for Russian shipbuilding is a strategic area of VEB.RF’s activities. Financing for the construction of tankers at Zvezda is a substantial contribution to promoting high-tech production and increasing the local content of Russian-made products in the Far East,” VEB.RF’s Deputy Chairman Artyom Dovlatov commented.
Financial documents for Phase 4 of the Moscow Region’s Central Ring Road (CRR) construction project were signed on 12 December 2019. The syndicate consisting of Gazprombank, Sberbank, the Eurasian Development Bank (EDB) and VEB.RF formalised its arrangement with South-Eastern Highway LLC to lend a total of 35.8 billion roubles for 17 years.
South-Eastern Highway LLC is a special purpose entity created by the Avtoban Group and the Russian Direct Investment Fund (RDIF) to carry out the CRR-4 project. Apart from the Avtoban Group and RDIF, the project also involves financial sponsors—the EDB, VEB.RF and InfraVEB—providing 4.1 billion roubles in subordinate financing for 20 years.
Nikolay Tsekhomsky, First Deputy Chairman – Member of the Management Board, VEB.RF: “Support for major infrastructural projects is high on our list of priorities. In the arrangement, VEB.RF will join the syndicate of senior lenders and provide a portion of subordinated debt as a financial sponsor for the project. Our participation made it possible to finalise the financing structure required by the concession agreement, which is essential to the smooth implementation of the project.”
Konstantin Pesotsky, Senior Managing Director of Structured Lending Products, Sberbank: “We are very honoured to participate in financing the country’s biggest transport infrastructure projects. When put into operation, the Central Ring Road can be a driver of economic growth in Russia, because this highway will considerably speed up the movement of people and goods in the Moscow Region.”
Pavel Brusser, Executive Vice President and Head of Infrastructure & PPP Projects, Gazprombank: “The syndicate of Russia’s largest banks, along with international financial institutions and the Russian Direct Investment Fund, will participate in the project by providing the financing necessary to keep to a tight construction deadline. The syndicate has experience of implementing a similar project, namely Phase 3, which will allow the project risks of the concession to be managed effectively.”
Timur Abdullakhanov, Managing Director and Head of Transport and Infrastructure, EDB: “This is a transport infrastructure project, belonging to a sector that we view as a priority. The project will promote cross-border transport through the Western Europe-Western China transport corridor. For instance, the Phase 4 road is immediately adjacent to the Western Europe-Western China highway and is connected to the M-7 Volga highway and farther to the border with Kazakhstan. The project not only contributes to interregional economic integration between Moscow and neighbouring areas and, in a wider context, across Russia’s transport system in general, but also helps the EDB member countries to increase their transit potential in Eurasia in the long term.”
The concession agreement was signed by Russian Highways, on behalf of the government, and South-Eastern Highway LLC on 2 June 2017. The CRR-4 project includes the financing, construction and operation of a 96.5-kilometre road section. The Phase 4 road is to run in the south-east of the Moscow Region, 50 kilometres from the Moscow Ring Road, through the Noginsk, Pavlovsky Posad, Voskresensk and Ramenskoye Districts and the municipalities of Elektrostal and Domodedovo.
The route is from the M-7 Volga federal highway (km 0 of the A-113 Central Ring Road) to M-4 Don. The predicted average daily traffic for 2030 is 40,300 vehicles. The design speed is 140 km/h. The first construction stage includes four lanes (two in each direction).
Phase 4 consists of 17 bridges and wildlife crossings, 40 flyovers and nine elevated structures. The project uses six grade-separated junctions for the following roads: M-7 Volga, Moscow Smaller Ring Road, Yegoryevskoe Highway, Moscow Smaller Ring Road–Chechevilovo–Moscow Greater Ring Road, M-5 Ural, Vostryakovo–Obraztsovo (access to Domodedovo Airport), M-4 Don.
The Central Ring Road (CRR) is of vital importance for the Moscow Region. The CCR project consists of five phases, each of them can be fully functional as an independent investment project. Phase 3 and Phase 4 are built under the concession agreements signed by Russian Highways with Motor Road Construction Corporation LLC (CRR-3) and South-Eastern Highway LLC (CRR-4).
On 11 December, at the 25th UN Climate Change Conference (COP 25), the VEB Group held a session on a green approach to urban sustainability. The delegation was headed by VEB.RF’s Deputy Chairman Cesare Ragaglini.
The session was opened by Russian Deputy Minister of Economic Development Mikhail Rasstrigin, speaking about Russia’s main climate change initiatives.
Cesare Ragaglini told the audience about the new role of VEB.RF as a coordinator of development institutions and VEB.RF’s new priorities in urban development, noted the significance of VEB.RF’s involvement in Russian national projects and underlined that they were consistent with the UN Sustainable Development Goals 2030.
According to Ragaglini, VEB.RF shares international concern about climate change. “Russia is a party to the Paris Agreement, ratified in September 2019. In the issue of climate change, countries are so interdependent that any green initiatives in one country will be of benefit to the entire global community,” he said.
VEB.RF’s representatives also emphasised the importance of adopting a practical approach to achieving the UN Sustainable Development Goals 2030. In this connection, Cesare Ragaglini mentioned that a high proportion of projects approved by VEB.RF in 2016–2018 met the green project financing criteria of the International Development Finance Club (IDFC). Additionally, VEB.RF’s representatives described the programme to implement the Environmental Protection national project and presented VEB.RF’s participation in the project worth 155 billion roubles to build energy-from-waste plants in the Moscow Region.
The session also noted that the UN Sustainable Development Goals 2030 could not be attained without the adequate development of urban areas, which are home to most people in the world. In this context, DOM.RF presented the results of its efforts to develop and test-operate the Urban Environment Quality Index and the Integrated Territorial Development Standards based on international best practices.
The session took place at the pavilion of the International Development Finance Club. VEB.RF has been actively involved with IDFC since its inception in 2011. The IDFC members are 26 national and regional development banks from Europe, Asia, Africa and the Americas. IDFC traditionally focuses its efforts on the global issues of climate change and the UN Sustainable Development Goals 2030.
About COP 25
The United Nations Framework Convention on Climate Change (UNFCCC) was adopted in May 1992 and entered into force in March 1994. The parties to the UNFCCC are currently more than 180 countries, including Russia, taking joint action to mitigate climate change and greenhouse gas emissions. The signatory nations (Russia signed the UNFCCC in 1994) agreed to implement national climate change programmes, carry out studies and report on their findings.
The Paris Agreement is an agreement signed by 195 UNFCCC members in 2015 to regulate greenhouse gas emissions and curb the increase in global average temperature as part of efforts to reduce global warming.