‘We are taking a one project/one cashflow approach that would integrate multiple tranches into a single financing package, but until we commit to a specific structure, maintaining flexibility is a key value,’ said Boon. ‘For example, a separate pipeline component could lend itself to an attractively priced fixed-income instrument. But the integrated approach is more consistent with the philosophy of the project and its sponsors, which is about linking the upstream with the midstream. Under the current approach, which could change subject to market conditions, we are hoping that JBIC will play an anchor role.’

The JBIC tranche would be underpinned by the potential purchase by Japanese companies of condensates and liquefied petroleum gas (LPG) from Dolphin’s gas processing facilities in Qatar. ‘Dolphin will require market terms for liquid sales to any party, Japanese or otherwise, and will involve our close co-operation with Qatar Petroleum,’ said Boon. It is understood that about 60,000-70,000 barrels a day of condensates will be produced and that Japanese offtakers are pursuing a substantial proportion of the total output.

‘Our dialogue with JBIC has been valuably facilitated by our special relationship with Mitsui,’ said Boon. Japan’s Mitsui & Company received a letter of intent in January for the supply of 440 kilometres of line pipe for the project (MEED 31:1:03).

DEL’s current approach to the multi-tranche debt package – which Boon stressed is adaptable to changes in market conditions – envisages the JBIC tranche contributing $700 million-900 million. A further $300 million-500 million could be sought from international banks coming into a JBIC syndication. An Islamically-structured facility of between $300 million-700 million is expected. Regional and local conventional banks and the regional capital markets could be tapped for up to $700 million, possibly more. Senior shareholder loans worth $500 million-550 million could be accessed. And a further $100 million-250 million could be accessed from other government financing agencies.

The order in which the different pieces of the financing jigsaw will be assembled will be determined by the terms and conditions negotiated with the different providers of the finance. The link to the Japanese lifting of condensates and liquids dictates that the JBIC tranche be investigated first. It is likely to be followed by the Islamic portions. ‘We will be careful to make sure that the terms and conditions of one set of lenders will be compatible with the requirements of other parties,’ said Boon.

After the JBIC – and the associated international syndicate – and the Islamic package will come the conventional bank loans, which are expected to be arranged on an expanded club basis. Tenor on the commercial debt is expected to be about 12-14 years.

The next steps in the financing will be the final determination of JBIC’s role and the signing of gas sales agreements (GSAs) with the three designated offtakers in the UAE. A GSA has been signed with Union Water & Electricity Company (UWEC) for Dolphin to supply Omani gas over the short term from the fourth quarter of 2003 and active negotiations continue to be pursued with Abu Dhabi Water & Electricity Authority (ADWEA) and Dubai Supply Authority (Dusup).

‘We will go out to the market when the key terms of the GSAs are completed, which we are expecting in the fourth quarter,’ said Boon. ‘We are hoping to come with a limited information kit for lenders in the first quarter of 2004.’

A further twist could come in the expansion of a bridge financing facility. ‘We are pleased to currently have bridge financing on attractive terms from a UAE-based institution,’ said Boon. ‘There are other expressions of interest from other UAE financial institutions and we are considering them.’ It is understood that the existing bridge facility is worth between $50 million-100 million.