Bank of China contributes to $1.04 billion syndicated loan tranche for Jambaran Tiung Biru (JTB) Gas Unitization Field Development Project (Linked to Record ID#92455)

Bank of China contributions to $1.846 billion syndicated loan for Jambaran Tiung Biru (JTB) Gas Unitization Field Development Project On August 5, 2019, Pertamina EP Cepu (PEPC) — a subsidiary of the Indonesian state-owned enterprise Pertamina (Persero) — signed a $1.846 billion syndicated loan agreement with a group of 11 lenders.

Participants in the loan syndicate included MUFG, SMBC, Bank of China, DBS, Intesa Sanpaolo, CIMB, Maybank, Bank Mandiri, Bank Negara, Bank Rakyat Indonesia, and Bank Tabungan Pensiunan Nasional.

The loan has four tranches: a $1.04 billion commercial tranche with a 10-year maturity that is priced all-in at Libor plus 315 basis points (captured in Record ID#92453), a $700 million commercial tranche with a 15-year maturity that is priced all-in at Libor plus 315 basis points (captured in Record ID#92455), a $40 million Islamic tranche with a 15-year maturity and unknown interest rate, and a $60 million Islamic tranche with a 10-year maturity and unknown interest rate.

MUFG was financial advisor and facility agent for the deal and was joined in the commercial lender lineup by SMBC, Bank of China, DBS, Intesa Sanpaolo, CIMB, Maybank, Bank Mandiri, Bank Negara, Bank Rakyat Indonesia and Bank Tabungan Pensiunan Nasional (BTPN). MUFG (Malaysia) Berhad was wakala investor for both Islamic tranches.

The loan comes with no recourse to PEPC’s parent company (Pertamina or guarantees from the Indonesian government. However, it is collateralized in a de facto sense.

It benefits from a trustee borrowing scheme (TBS), which was first developed and employed by Pertamina and its production-sharing contractors in 1984.

The TBS is a proven and tested financing structure with a track record of successful implementation in Indonesia for over 30-years. Lenders draw comfort from this well-established structure, without the need for a traditional security package. Under the TBS, loans are repaid by a trustee from an agreed portion of proceeds under identified revenue contracts.

Lenders look solely to this source of debt service for payment, with no recourse to the project and no security interest in the project assets or contracts.

The trustee (HSBC Bank USA, in the case of the JTB Project) is the borrower under the loan agreements with the lenders, and debt service payments are made from trust accounts or accounts held in the name of the trustee on trust for the lenders and PEPC as the trust beneficiaries, in New York.

In the JTB Project, Pertamina as offtaker will pay PEPC’s portion of the gas and condensate revenues to the trust accounts directly.

These revenues will be paid by the trustee to the lenders for repayment of principal and interest (or fixed investment return in the case of the Islamic finance tranches). This source of debt service functions as the primary security for the lenders.

The Jambaran Tiung Biru (JTB) Gas Unitization Field Development Project involves the development of proven gas reserves, as well as the construction and operation of a gas processing facility and pipelines.

It is located in the unitised Jambaran Tiung Biru field (JTB field) in Bojonegoro Regency, East Java Province, Indonesia.

The project is supported by gas sales of up to 192 million standard cubic feet per day under a long-term, fixed-price and fixed-volume take-or-pay gas sales agreement with the offtaker, Pertamina.

The development scope covers the drilling of six development wells that will produce 315m standard cubic feet per day of raw gas, the designing and installing of gas processing facilities with a maximum capacity of 330m standard cubic feet per day and the development of gas flow lines from the wells to the gas processing facilities and sales gas pipelines from the gas processing facilities to a gas transmission pipeline.

The gas will be channelled through the Gresik-Semarang transmission pipeline – managed by PT Pertamina Gas (Pertagas) – to Central and East Java: the Tambak Lorok Gas and Steam Power Plant (PLTGU) in Central Java and the Java-3 PLTGU in East Java will both be fueled by the project. JGC Corporation and PT Rekasaya Industri are EPC contractors responsible for project implementation.

Project completion was originally scheduled to occur by the end of the last quarter of 2021. However, this project has faced implementation delays due to the Covid-19 pandemic. In May 2022, the project had reached 96.88% completion. The project was reported to be officially supplying gas in February 2023