PAE Campana Refinery

active

 This proposed investment is a corporate loan to Pan American Energy, S.L., Argentine Branch (“PAE” or the “Company”), which is Argentina’s largest fully integrated petroleum company of the private sector.  In addition to holding about 1.3 billion barrels of proven oil and gas reserves, PAE is the country’s third largest refiner, (owning a refinery with a nameplate capacity of 95,000 oil barrels per day (bpd) (the “Refinery”) and a retail network under the trademark “Axion Energy” of 68 service stations now operated by the Company and 563 operated by third parties. In 2015, IFC provided financing to PAE to help finance their 2015/2016 capex program (IFC Project# 36146.) The public disclosure documents for IFC’s investment in PAE (Project# 36146) is available at: https://disclosures.ifc.org/#/projectDetail/ESRS/36146.  The Company has, up to this date, successfully implemented the due Environmental and Social Action Plan (ESAP) actions for this investment, and it is in material compliance with the IFC PSs. Prior to the transfer of the entirety of the ongoing concern (fondo de comercio) and all of the liabilities from Axion Energy Argentina S.A. (“Axion”) to PAE, IFC provided financing to Axion to help implement an expansion and upgrade program at the refinery (IFC Project # 36221). The public disclosure documents for IFC’s investment in Axion (Project# 36221) is available at: https://disclosures.ifc.org/#/projectDetail/ESRS/36221. The financing was assigned from Axion to PAE as part of the transfer of the entirety of the ongoing concern (fondo de comercio). The refinery, to this date, successfully implemented the due Environmental and Social Action Plan (ESAP) actions for this investment, has established sound environmental and social (E&S) management systems, and has qualified E&S dedicated personnel. Given its successful implementation of the Refinery Expansion Project, IFC is considering an investment in PAE comprising an A Loan of up to US$100m and a B Loan of US$300m to complete its ongoing multi-year refinery upgrade program to continue (a) increasing the production of refined products, (b) producing additional higher value and cleaner burning fuels, and (c) reducing Refinery air emissions (the “Project”.)  While much of the proceeds will be used to complete the ongoing expansion program covered in the previous IFC investment, the expansion will also include some upgrades of existing operations such as, addition of a preheating train to the primary distillation unit; replacing the reformer’s fired heater ; replacing equipment at the light end system of the catalytic cracker; replacing  the two coke drums in the existing delayed cracker unit; upgrading the coke storage facility to allow segregating two grades of coke (anode coke grade from green coke ); installing a new fired heater and scrubber at the existing diesel hydrotreater unit to convert it into a naphtha hydrotreater; and upgrading the fire prevention/response network; among others. After the Project completion, the refinery will be meeting Argentinean’s 2022 fuel quality standards for sulphur concentration as follows: premium gasoline (10 ppm); regular gasoline (50 ppm); premium diesel (10 ppm); and light and heavy diesel (350 ppm).The refinery is a high-conversion refinery that processes mainly heavy crude (only 20% light crude) from southern and western Argentina (most of which is supplied by PAE’s upstream business) from the Golfo San Jorge, Neuquina and Austral basins; and produces a wide range of products including gas oil, mogas, fuel oil, jet fuel, coke and others such as liquid petroleum gas (LPG), solvents for petrochemical uses, and coke for the steel industry. The refinery’s main operation units include a primary distillation (atmospheric and vacuum distillation units); delayed coking; fluid catalytic cracking; hydrotreating (remove sulfur, olefins, nitrogen and some aromatic compounds); reforming (obtain higher production of high-octane gasoline from naphtha cuts); and solvent hydrogenation (produce aliphatic solvents for chemical applications). Other units include a solvents and lubricants’ blending plants, among others. The refinery also has (a) 74 double containment storage tanks for a total combined storage capacity of 400,000 m3 to store crude, and intermediate and end products; (b) 12 bullets/spheres for LPG storage with a total capacity of 2 million liters, and (c) an open storage area to handle/store its coke production from which it loads it to trucks or ships through enclosed conveyors. The Project is being implemented within the premises of this existing refinery.The refinery is located at the port of Campana alongside the Parana River, 75 km from the city of Buenos Aires, Argentina; in an area of approximately 130 hectares. The refinery is located at the northeast of Campana, in a designated industrial area of Campana, a mid-size city (some 94,000 inhabitants) in a moderately populated industrial zone outside the Buenos Aires metropolitan area. https://goo.gl/maps/Z7R4V4NUBnu.