The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Lee Duk-hoon, “Korea Eximbank”) announced on April 4 that the bank will provide USD 707 million (a USD 492 million Direct Loan and a USD 215 million Guarantee) to a petrochemical facilities project in Turkmenistan in which LG International, Hyundai Engineering, and Hyundai Engineering & Construction are to jointly participate.

Developed by Turkmenistan’s state-run gas enterprise Turkmengas, the project is aimed at building a petrochemical complex in Kyyanly on the Caspian coast.

Once completed, the USD 3 billion complex will process locally mined natural gas through its ethane cracking unit to produce 386,000 tons of high density polyethylene (HDPE) and 81,000 tons of polypropylene (PP) annually.

LG International will be responsible for the sale of the finished petrochemical products.

A Korea Eximbank official remarked, “This financing is our first ever to Turkmenistan, and is likely to speed up the entry of Korean companies into the country’s gas plant market and its resource-rich Caspian coastal region.”

A contributing factor in the awarding of the project to Korean companies was Korea Eximbank and K-sure’s bold move to venture into non-traditional project markets such as Turkmenistan.

Having expressed their interest in financing the project since its initial stage, Tthe two Korean ECAs worked over a year to negotiate the terms of the financing agreement with Turkmenistan’s government.

It also helped that LG International and Hyundai Engineering had prior experience of building a gas processing facility in Turkmenistan (completed in August 2013).

The project will be financed jointly by seven Korean commercial banks and several foreign commercial banks.

Kookmin bank, Industrial bank of Korea, Nonghyup bank, Shinhan bank, Woori bank, Korea Exchange bank, Hana bank.

The participation of Korean commercial banks was made possible by Korea Eximbank’s USD 215 million guarantee.

As the country with the world’s fourth-largest natural gas reserves, Turkmenistan derives a large part of its fiscal revenue from exporting natural gas.

Accounting for 9.3% of the world’s proven natural gas reserves but only 1.9% of global output, the country has great potential for additional gas development.