Banks chase multiple advisories

13 December 2002

International banks are competing hard for a range of important financial advisory mandates on Gulf infrastructure projects. The initiatives in need of financial advice range from liquefied natural gas (LNG) complexes to independent water and power projects (IWPPs), but the small number of banks that are both capable and interested has led to growing problems over conflicting interests.

The Qatargas II LNG project, promoted by Qatar Petroleumand the US' ExxonMobil Corporation, invited six banks to bid for the financial advisory role (MEED 29:11:02). Two declined - Bank of Tokyo-Mitsubishiand Mizuho Financial Group- while four bids came in from HSBC, Royal Bank of Scotland (RBS), Societe Generaleand ANZ Investment Bank. However, Soc Gen is understood to have pulled out of the running due to potential conflicts of interest stemming from its role in another regional LNG project. Banking sources close to the deal say that RBS is in pole position to win the mandate and maintain its unparalleled success in Qatar.

Despite Soc Gen's role as adviser on the Egyptian LNGproject (see above), the bank is understood to have been appointed financial adviser on what could be Iran's debut LNG project, Persian LNG, which is being promoted by National Iranian Oil Company, the Royal Dutch/Shell Groupand Spain's Repsol YPF (MEED 15:11:02).

The number of potential bidders for future LNG advisory mandates is falling, with heavyweights such as BNP Paribasand Citibank constrained by their involvement with Ras Laffan Liquefied Natural Gas Company II (RasGas II)and Oman LNGrespectively.

There has also been progress on two other key regional projects. Five institutions have been invited to bid by the 15 December deadline for the financial advisory mandate issued by the Dammam-based GCC Interconnection Authority (GCCIA). The five are BNP Paribas, Citibank, Credit Suisse First Boston, HSBC and Gulf Investment Corporation (MEED 8:11:02, Cover Story).

Several of the banks in contention for the GCCIA mandate - along with Soc Gen, Arab Banking Corporationand ANZ - are also bidding for the IWPP programme under development by Saudi Arabia's Saline Water Conversion Corporation (SWCC) and Saudi Electricity Company (SEC). 'This is a decent assignment if it goes ahead as planned,' says one of the bidders. 'The main concern is over what might happen if the rug is pulled out by a sudden return to the gas initiative.' Three of the four IWPPs proposed by SWCC and SEC were originally part of the three core ventures of the stalled initiative (see Power & Water).

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