LONDON (Reuters)–A 15-member international banking syndicate on Friday signed off on over $1 billion in financing for a major US-backed trans-Caspian oil pipeline–sealing what project participants said was one of the biggest project finance deals in recent years.
This means that all financing is now in place for the one million-barrels per day (bpd) Baku-Tbilisi-Ceyhan (BTC) pipeline that is led by oil major BP BP.L and will run from the Azeri section of the Caspian Sea to Turkey’ Mediterranean port of Ceyhan.
BTC CEO Michael Townsend said the signing was the culmination of two years of hard work by the consortium.
"This is a landmark deal–one of the biggest private sector financial packages ever done," Townsend told Reuters after the signing. "This means we have completed a total loan package of $2.6 billion and this covers $1 billion of that."
BP had started the syndication process in October and had expected to complete it in the first quarter of 2004. The 1760-km (1100 mile) BTC has forged ahead of rival routes touted by Tehran and Moscow–partly due to support from Washington–which favors the link as a means to cut Iranian and Russian influence in the oil-rich Caspian region.
Townsend said a final signing ceremony would take place in Baku on February 3–with representatives of Azerbaijan–Georgia–and Turkey expected to initial the documen’s.
While the project has faced considerable criticism from international human rights and environment groups–multilateral lenders and oil companies argue that the BTC is key to unlocking the impoverished region’s economic potential.
Japan’s Mizuho–Societe Generale SOGN.PA of France–Dutch ABN Amro AAH.AS and US Citicorp lead the syndicate. The other members are Banca Intesa–BNP Paribas BNPP.PA–Credit Agricole Indosuez–Dexia BIMPp.PA–Hypovereinbank–ING ING.AS–KBC–Natexis Banque Populaire–San Paolo IMI–Germany’s West LB–and Royal Bank of Scotland HBOS.L.
Each bank is believed to be lending $68 million–which means a total of $1.02 billion. Townsend declined to disclose loan terms.
Of the remaining funds–$1 billion came from loans from consortium members BP–Statoil–Total and ConocoPhillips–while the Japan Bank for International Cooperation–the European Bank for Reconstruction and Development and the International Finance Corp IFC.UL provided the rest.
The consortium also includes Azeri state oil company SOCAR–Japan’s Itochu 8001.T–Italy’s ENI ENI.MI–US Unocal–and others.