Circle Maritime Invest Loan II

Location:

Kazakhstan

Project number:

48105

Business sector:

Transport

Notice type:

Private

Environmental category:

B

Target board date:

23 May 2017

Status:

Repaying

PSD disclosed:

21 Mar 2018

Translated version of this PSD: Russian

Project Description

A secured loan of up to US$ 9.9 million to JSC Circle Maritime Invest (CMI), a private company registered in Kazakhstan. CMI owns and operates fleet offsore support vessels (OSVs) in the the Caspian Sea. The loan will be used to finance the acquisition of two new build tugs.

The tugs will be constructed by a European shipbuilding company in compliance with the European safety, quality and fuel efficiency standards.

Project Objectives

The new vessels will be chartered to third parties and will be initially used for transportation of construction blocks and equipment by Tengizchevroil for further development of the Tengiz oil field in Kazakhstan.

The vessels will not be designed and used for ice-breaking activities and will have the lowest Ice Class 1C, just enough to withstand accidental collisions with floating ice. The tugs will not be used for transportation of oil products or hazardous materials.

Transition Impact

The project will promote competition in the sector of OSV services and improve corporate governance of the Client.

Client Information

CIRCLE MARITIME INVEST JSC

Circle Maritime Invest (CMI) is a joint stock company incorporated in Kazakhstan. CMI owns and operates a fleet of marine vessels employed in the Caspian Sea which provide maritime logistic upport and services, including to offshore oil developers in the region, however, CMI or its vessels re not directly involved in the exploration, extraction or transportation of oil or gas. CMI is an existing lient of EBRD through the previous project signed in 2011.

EBRD Finance Summary

USD 9,900,000.00

The EBRD loan will be up to US$ 9.9 million. Another parallel loan of up to US$ 20 million will be rovided by a local commercial bank.

Total Project Cost

USD 38,500,000.00

Environmental and Social Summary

Categorised B (2014 ESP). The environmental and social impacts associated with the procurement and operation of the two new tug boats in the Caspian Sea to provide maritime logistic services primarily for expansion and development of the onshore Tengiz oilfield are limited and can be addressed through the identified mitigation measures.

Environmental and social due diligence (ESDD) was undertaken by the Bank's environmental and social specialists expanding on the earlier ESDD carried out for the Bank's previous loan to CMI (DTM 41446). ESDD reviewed CMI's current E&S performance as well as potential issues associated with the proposed project.

The new tug boats will be built at a shipyard in the Netherlands and their construction is planned to start in May-June 2017. The tugs will be chartered by Tengizchevroil LLP ("TCO"), a major oil producer in Kazakhstan or its primary contractor(s). CMI will have a contractual obligation to comply with all relevant environmental and maritime safety, OHS and labour requirements, standards and operational procedures of TCO. A review of publicly available information on TCO indicated that it has well-established E&S management systems in place.

Civil Society Organisations (CSOs) have claimed that thousands of endangered Caspian seals may have suffered from ice breaking activities in the Kazakhstani part of the Caspian Sea due to inadequate consideration of environmental impacts. A review of the risks posed by ice breaking activities to the Caspian seal population was undertaken as part of the ESDD, which indicated that adequate measures have been put in place by the chartering company, Caspian Offshore Construction (COC), for protection of the seals and their pups. According to COC's current procedures, all ice-breakers are required to participate in a COC initiative to identify the locations of breeding seals using satellite and aerial imagery and reconnaissance, leading to development of specific measures to avoid such areas by route planning. Accordingly, all ice-breakers are equipped with thermal imagers and additional personnel provided by COC for monitoring. When seals are discovered on the route, the vessels are required to bypass the locations at a safe distance. CMI has also confirmed that the existing and new vessels will not go through Nature Reserve Areas.

The new tug boats will be contracted to transport construction materials and equipment to the Tengiz oil field development, which is subject to CSO scrutiny. The new tug boats will be using a new 68 km-long navigation channel which is under construction. A number of artificial islands will be formed along the navigation channel for the Caspian seals during and after their migration and pupping season. According to the Environmental and Social Impact Assessment (ESIA) prepared for Tengiz Oil Field Expansion, a Marine Fauna Management Plan has been developed for the implementation of specific biodiversity mitigation measures during construction and operation of the navigation channel, including: visual marine mammal observations by trained observers; use of acoustic deterrent devices where appropriate; soft-start procedures for activities creating underwater noise; vessel management measures, such as use of approved navigation lanes; and appropriate speed restrictions. The ESIA concluded that with the application of these mitigation measures there will be no significant adverse impacts on the priority biodiversity features.

The annual environmental and social reports which have been regularly submitted by CMI and other supplementary information provided by CMI indicate that the vessels operated under the earlier loan are run in compliance with regulatory requirements, EU environmental standards and international (including IMO, MARPOL and SOLAS) standards of maritime safety and environment protection.  All mitigation measures included in the Environmental and Social Action Plan (ESAP) for the earlier loan have been fully implemented. The only additional action identified during the ESDD is the need to revise the Company's HR policies to include freedom of workers to join trade unions, employment of young workers and equal opportunities.

An amended ESAP has been prepared for the new project which requires the policies and procedures developed for the earlier loan to be adopted and implemented on the new vessels, including a grievance mechanism for workers, stakeholder engagement plan, energy management programme, and continued reporting on GHG emissions, as well as revision of the HR policy and implementation of robust operational procedures for the protection of the Caspian seals.

Monitoring of the environmental and social performance of the project will be carried out through annual reporting.

Technical Cooperation

None.

Company Contact Information

Gulam Aliyev
Gulam.Aliyev@coc.kz
www.coc.kz

 

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