Taylor-DeJongh is serving as financial advisor to the seven ECA consortium group for the financing of the US$3.6bn Baku-Tbilisi-Ceyhan (BTC) Pipeline. The project is being developed by a consortium of international oil companies including BP, Socar, Unocal, Statoil ASA, TPAO, Total, ConocoPhillips, Eni, Inpex and Itochu, and Amerada Hess. The BTC pipeline will transport 1mn barrels per day of oil over a 1,780km route from the Sangachal Terminal near Baku in Azerbaijan, through Georgia, to an export terminal to be developed at Ceyhan on the Mediterranean coast of Turkey.
Taylor-DeJongh has been providing the full range of financial advisory services to the seven ECAs on this transaction, including advising on: the project’s financial and commercial structure, project economics, lender collateral security issues, risk allocation and mitigation issues, financial and project documentation, and negotiations.
The senior lender group, composed of seven ECAs (US Ex-Im Bank, JBIC, Nexi, Hermes, Coface, ECGD, and Sace), two MLAs (IFC and EBRD), Opic, a group of commercial banks, and certain of the sponsors. The various senior lenders have received credit approval for the transaction and financial close is expected to occur very shortly.
The BTC project is one of the most challenging project financings ever, claims Taylor De-Jongh. The following aspects of the project when considered in the aggregate set this project off from most other project financings: the route of the project is through three countries raising a range of multi-jurisdictional issues; size of undertaking (cost and scope); political risk considerations given the location of the pipeline; complex and integrated commercial issues involving the pipeline, shared facilities and upstream/offshore production facilities; very large and diverse sponsor group; complex funding structure; innovative pipeline tariff arrangements; environmental challenges; and a high degree of visibility with NGO and other parties.
Sponsors and equity stakes: BP (30.1%), Socar (25), Unocal (8.9%), Statoil (8.71%), TPAO (6.53%), Eni (5%), Total (5%), Itochu (3.4%), ConocoPhillips (2.5%), Inpex (2.5%), Armerda Hess (2.36%).
Financial close is expected early in 2004. Total project cost is US$3.6bn. Total debt is US$2.52bn, total equity US$1.08bn.
Financial adviser to the project is Lazard.
Legal adviser for the project is Sullivan & Cromwell. Legal adviser for the lenders is Freshfields Bruckhaus Deringer.