Completed Mixed AidData Chinese Aid

Bank of China (Paris Branch) provides a $177.7 million loan for Phase 1 of Karakul Gas Field Project (Linked to Record ID#54069, #39659, #39658, #54489 and #39997)

$177.7M USD

Funder	Bank of China (BOC)
Recipient Organization	New Silk Road Oil and Gas Company Ltd
Country	Uzbekistan
Start Date	May 13, 2017
End Date	Mar 31, 2031
Duration	5,070 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`53865`

Grant Description

Bank of China (Paris Branch) provides a $177.7 million loan for Phase 1 of Karakul Gas Field Project In September 9, 2013, China National Petroleum Corporation (CNPC) and Uzbekneftegaz established a special purpose vehicle (SPV) and joint venture — called New Silk Road Oil & Gas Limited Liability Corporation (新丝绸之路石油天然气有限责任公司 or NSROG or Новый Шелковый путь or СП ООО "Новый шелковый путь Нефт и газ") — to jointly develop three natural gas fields (Dengizkul, Khojadavlat and Sharky Alat) in the Karakul block.

Then, on May 13, 2017, the Paris Branch of Bank of China provided a $177.7 million loan to New Silk Road Oil and Gas Company for Phase 1 of the Karakul Gas Field Project. CNPC issued a corporate guarantee in support of this loan.

Then, in 2020, CNPC Capital Co., Ltd. (中国石油集团资本股份有限公司) provided a 9-year, $178 million loan to New Silk Road Oil & Gas Limited Liability Corporation (新丝绸之路石油天然气有限责任公司 or 新丝路公司 or NSROG or Новый Шелковый путь or СП ООО "Новый шелковый путь Нефт и газ") — a special purpose vehicle and joint venture of China National Petroleum Corporation (CNPC) [50% equity stake] and Uzbekneftegaz [50% equity stake] — for the Karakul Gas Field Project.

The loan’s principal amount outstanding was $117 million as of December 31, 2020. The Karakul Gas Field Project was implemented in three phases. The total cost of the first phase was $377.5 million.

The purpose of the project was to develop three gas condensate fields (Dengizkul, Kojadavlat, and Sharky Alat) in the Bukhara-Khiva region of Uzbekistan.

Upon completion, the three fields were expected to produce 869.6 million cubic meters of natural gas for exportation and 6,400 tons of gas condensate for domestic markets annually.

The project was implemented by three CNPC subsidiary companies: China Petroleum Engineering & Construction Corporation (CPECC) will develop the fields, designs, logistics, construction, and commissioning of facilities for the project; XIBU Drilling Engineering Company Ltd. will drill 10 production wells; and China National Logging Corporation will repair 6 wells and test production wells.

The project was originally scheduled to begin in 2014, but construction did not begin until May 30, 2017.

On December 4, 2017, gas production commenced in the Dengizkul field after the drilling of 2 new gas wells and repairing of 3 gas wells. This milestone marked the completion of the first phase of the project.

As of May 17, 2018, the development of the Kojadavlat and Sharky Alat gas fields (the second and third phases of the project) was underway. All three gas fields became operational by August 2018. However, pipeline construction activities were still ongoing in late 2018 and early 2019. All three phases of the project were completed on May 5, 2019.

All natural gas from the Dengizkul, Kojadavlat, and Sharky Alat fields (approximately 1 billion cubic meters of natural gas per year) is to be exported to China via Turkmenistan-China Gas Pipeline (which was constructed with financing from China Development Bank and Bank of China, as captured via Record ID#54489 and Record ID#39997).

📋 Staff Comments

This project is also known as the New Silk Road Project or Gas Condensate Field Khojadavlat Project. The Chinese project title is 新丝绸之路项目 or 卡拉库利气田地面建设项目 or 卡拉库利气田项目 or 西莎、西吉和东阿拉特气田开发. The Russian project title is 3 газовых месторождения -- Денгизкуль, Ходжадавлат и Восточный Алат or проекта Каракульского блока газоконденсатных месторождений (ГКМ).
The spelling was a little different in each source for project site names, specifically Sharky Alat vs. Sharqiy Alat and Dengizkul vs. Khojasayat (the name of the overall region).
The Chinese translation of the September 9, 2013 agreement is 《新丝绸之路石油天然气有限责任公司创建协议》.
Leading up to the development of these fields, the China National Oil and Gas Exploration and Development (CNODC) — a subsidiary of CNPC — conducted a 5-year geologic oil survey worth $359 million in 2006 (as captured via Record ID#54069), drilled 13 exploratory wells worth $260.2 million in 2011 (as captured via Record ID#39659), and undertook further oil exploration activities worth $14.9 million in 2012 (as captured via Record ID#39658).
The borrowing institution (SPV), which is jointly owned by CNPC (50% equity stake) and Uzbekneftegaz (50% equity stake), is also known as New Silk Road Oil & Gas Company Ltd. Uzbekneftegaz is a state-owned oil and gas company in Uzbekistan. CNPC is a state-owned oil and gas company in China.
Several sources suggest that multiple CNPC-guaranteed loans were issued in support of this project, which makes sense since the proceeds of the $177.7 million Bank of China loan were only to be used for the project’s first phase. The sources of financing for the project’s second phase and third are unknown. This issue merits further investigation.

📚 Sources & References

INDUSTRY SNAPSHOTS; ASIA - CHINA - PETROLEUM AND CHEMICAL
CNPC to develop new gas-condensate fields in Uzbekistan
CNPC to develop new gas fields in Uzbekistan
Lukoil
CNPC to develop Uzbekistan's gas condensate fields
CNPC and Uzbekneftegaz start gas production in Uzbek blocks
CNPC Pushes Ahead With Upstream Plans in Uzbekistan
Uzbekistan-China JV New Silk Road Oil and Gas Commences Drilling in Bukhara
In 2017 CNPC will begin development of new gas fields in Uzbekistan
Uzbekneftegaz and CNPC discuss next steps to develop cooperation
Uzbek-Chinese JV launches gas production in Uzbekistan
Uzbekistan and China Start Gas Production in Bukhara Region
Uzbekneftegaz JSC and China’s CNPC Corporation Discussed Further Cooperation Steps
Uzbekneftegaz and the China National Petroleum Company (CNPC) have been implementing a number of promising projects
New Silk Road Oil and Gas starts gas extraction in Bukhara region
Uzbek- Chinese JV New Silk Road Oil & Gas starts pumping, Узбекско-китайское СП продолжает добычу природного газа в Узбекистане
中乌合建卡拉库利气田项目一期投产
CNPC 2017 Annual Report
Chinese CNPC to start development of new gas fields in Uzbekistan this year
中乌合建卡拉库利气田项目一期投产
LIST of investment projects with FDIs by sectors in Uzbekistan (2019)
BRI in Central Asia: Mineral and Petroleum Exploration
Extraction and Processing Projects
A number of cooperation agreements signed between CNPC and its partners
在“一带一路”国际合作高峰论坛期间中国石油与合作伙伴签署一批合作协议王宜林在中国石油总部分别与合作伙伴领导人会晤
乌兹别克斯坦卡拉库利气田项目一期顺利投产
乌兹别克斯坦子公司
卡拉库利气田二三期建设掀高潮
CNPC in Uzbekistan, “白金之国”——乌兹别克斯坦
打通气脉迎高产记新丝绸之路项目2019年首次清管作业
中国石油在乌兹别克斯坦, КННК и нефтяная компания Узбекистана подписали ряд соглашений о сотрудничестве в нефтегазовом освоении
Karakul Investment Block Conventional Gas Field
Uzbekistan
New Silk Road Oil And Gas starts gas extraction in Bukhara region
Phase I Project of Uzbekistan’s Karakul Gas Field becomes operational
Phase I project of Uzbekistan’s Karakul gas field becomes operational
Chinese CNPC to start development of new gas fields in Uzbekistan this year
Uzbekistan and China Begins Gas Production in Bukhara Region
Uzbek-Chinese JV starts development of gas condensate fields, 2017 Annual Report, В Узбекистане запущен совместный китайско-узбекский проект по добыче газа в Бухарской области
China
Uzbek joint gas field ready to pump, СП ООО NEW SILK ROAD OIL AND GAS
Tianyu Han
Mayer Brown - Hallam Chow Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.