The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Kim Yong-hwan, ‘Korea Eximbank’) announced on September 16 that it will provide a USD 117 million guarantee for the Akkas Gas Field Project in Iraq, a project awarded to Daewoo Engineering & Construction (Daewoo E&C).

The guarantee is comprised of a USD 46 million advance payment bond* and a USD 71 million performance bond**.

* Advance payment bond: a type of guarantee by the financier to cover the potential liability of the contractor to repay advance payments received from sponsors.

** Performance bond: guarantee by the financier covering the liability of the contractor in the event of the latter’s failure to fulfill the terms of the contract.

Sponsored by KOGAS AKKAS B.V., a special-purpose vehicle set up by Korea Gas Corporation, this project involves the construction of a central processing facility at the Akkas Gas Field in Anbar Province, Iraq.

Estimated to cost USD 79 million in construction alone, the project is especially meaningful in that it represents the first deal won by Deawoo E&C in Iraq.

Korea Eximbank explains that this project has set the standard for overseas resource development projects sponsored, built, and financed exclusively by Korean entities ？ in this case by a Korean public utility, private-sector construction company, and government-owned bank, respectively.

The Akkas Gas Field project is one among the four oil and gas projects in Iraq in which Korea Gas Corporation is currently participating, and is also the first project of its kind in which the utility is participating as an operator.