MUFG recently acted as the Mandated Lead Arranger and Documentation Agent Bank for the $1 billion upsizing of a 5-year Secured Oil Prepayment Facility on behalf of KMG Kashagan B. V. (KMGK), which represents KazMunaiGas' and Samruk Kazyna's participating interests in the Kashagan oil field. Vitol SA again acts as an Off-taker for the crude oil volumes in this transaction.

The transaction has provided KMGK with new sources of liquidity and will fund the second and potentially third deferred instalments due to other Kashagan Production Sharing Agreement Parties including Exxon, Shell, Total, ENI and INPEX.

The upsizing consists of two tranches: Tranche B, committed and drawn, totals $600 million and Tranche C, totalling $400 million, is uncommitted and will be available for drawdown upon Kashagan achieving certain milestones.

Kashagan is located offshore in the northern part of the Caspian Sea. The field was discovered in 2000, and with an estimated 36.6 billion barrels of original oil in place, is considered to be the world's largest oil discovery within the last 30 years. Kashagan's Commercial Production Date was declared on 1 November 2016.

MUFG has become a top tier bank for the KMG Group and for Vitol in the area of Structured Trade Finance in Kazakhstan. MUFG had also acted as Mandated Lead Arranger, Bookrunner and Documentation Agent Bank for the initial US$1 billion 5-year Secured Oil Prepayment Facility, which closed in November 2016.

Francois-Xavier Reignier, Executive Director in MUFG's Commodities and Structured Trade Finance team, said:

“This strategic transaction has enabled KMGK to raise alternative sources of liquidity at what was a critical time for the company. Jointly with KMGK and Vitol, MUFG was able to structure the transaction based on the long-term potential of the Kashagan operation, despite the challenges of successfully bringing a major project such as this on stream. This meant we were able to support the immediate needs of two of our clients, on the funding side for KMGK and on the volumes off-take front for Vitol, in the most effective manner."