HSBC wins Qatofin advisory

06 September 2002

HSBC Investment Bankis expected to be formally appointed in early September as the financial adviser for Qatofin.

Qatofin is a three-way joint venture project company owned by Qatar Petrochemical Company (Qapco)- in which France's Atofinaholds a 10 per cent stake - with 63 per cent, Atofina, with 36 per cent, and Qatar Petroleum (QP), with 1 per cent. The project company will build a 450,000-tonne-a-year (t/y) linear low-density polyethylene (LLDPE) plant next to the existing Qapco facilities in Mesaieed.

The Qatofin project itself is expected to cost up to $550 million, but the total financing package sought is likely to be nearer $600 million-700 million as Qatofin will also be a minority shareholder in a proposed ethane cracker from which it will receive its feedstock.

The 1.3 million-t/y upstream venture is expected to cost $430 million and will be owned by Q-Chem II, with 53.31 per cent, Qatofin, with 45.59 per cent and QP, with 1 per cent. The ethane feedstock for the cracker will be sourced from the enhanced gas utilisation (EGU) project and the onshore facilities of the Dolphin project. The ethylene generated by the cracker will be transported to Qatofin and Q-Chem II through a 120-kilometre pipeline that is to be built between Ras Laffan and Mesaieed. It will initially have capacity of 1.3 million t/y of ethylene, but will be designed for a later upgrade to 1.6 million t/y (MEED 21:6:02, Petrochemicals).

HSBC will be working closely with Royal Bank of Scotlandwhich is acting as the financial adviser to Q-Chem II (MEED 31:5:02). It is understood that no firm schedule has been drawn up, but the Qatofin financing package will probably be brought to market in the second quarter of next year at the earliest.

A number of other key Qatari borrowings are expected to clear the market first, among them the imminent gas-to-liquids (GTL) financing, a combined debt package for the third and fourth trains of the Ras Laffan liquefied natural gas (LNG) initiative and possibly a refinancing package for Qatar Vinyl Company.

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