Primeline Energy Holdings signs project finance for gas field development

Subscribe to our newsletter and get the latest news and business opportunities in your inbox
Primeline Energy Holdings signs project finance for gas field development

Primeline Energy Holdings Inc. signed project finance to complete the Chinese LS36-1 gas field development on 17th November 2014.

The LS36-1 offshore gas field is located in 84 m of water in the East China Sea about 150 km from Wenzhou. The development involves the construction of a production platform with 4 production wells, a subsea pipeline and an onshore processing terminal.

As announced on 7th November, Primeline, and its affiliate company Primeline Petroleum Corp. (PPC) secured a project finance facility from a syndicate jointly led by China Development Bank (CDB) and China Export and Import Bank (EXIM) with Shanghai Pudong Development Bank (SPDB) as participant and agent bank.

The facility is made available to Primeline and PPC on a joint borrower basis and secured on their respective interests in the field development. The principal amount of the facility is US$274 million (of which the company's share is US$ 205.5 million) which will be repayable over 9 years at an all-in interest rate of 6 month LIBOR+4.7%.

Following the signing of the documentation, the security arrangements and accounts set up will be implemented with first drawdown expected around the end of November.

China National Offshore Oil Corp (CNOOC) is the 51% owner and operator of the filed development. Under agreements signed by CNOOC, Primeline and PPC in 2010, CNOOC has advanced all development costs to date. The loan facility has been put in place in order to finance the obligation of Primeline and PPC to repay their share of the development costs (collectively 49%) to CNOOC.

Development trial production, which started in July 2014, has progressed extremely well and has averaged 23.3 mmcfpd since early September. Once the loan has been drawdown and CNOOC repaid, Primeline and PPC expect to receive a significant amount of income for their shares of the sales revenue which has been generated during the trial production period and which has been held by CNOOC for the account of Primeline and PPC pending repayment.

Share this news

Join us

In order to get full access to News section, you must have a full subscription. You can check all the benefits of becoming a member and purchase a subscription on our membership page.