'The initial talks have been about the QLNG debt, rather than the corporate borrowing Oman LNG is expected to take to cover its equity stake,' says one banker looking at the transaction. 'The current schedule sees a PIM [preliminary information memorandum] going out in July with financial close coming in the late third or fourth quarter.'

The shareholder structure of QLNG has not been finalised (MEED 26:3:04). The expectation is that Muscat and Oman LNG will large stakes. Spain's Union Fenosais likely to take a single-digit stake, and negotiations for the inclusion of a fourth shareholder - likely to be a Japanese offtaker taking about 8 per cent - have reached an advanced stage.

'The real question is whether they want to go for a large or small MLA [mandated lead arranger] group,' says the interested banker.

The pricing of the debt will also attract attention. 'It should be outside the Oman LNG refinancing,' says the banker. 'There is pre-completion risk and the offtake position is not as strong. In addition, there will not be feedstock subordination on this deal.' Oman LNG has an obligation to meet its debt servicing obligations ahead of paying for its gas feedstock: this clause is not anticipated on Qalhat LNG.

Citigroupis acting as financial adviser.