The banks still in discussions are: Societe Generale– which is also working as ELNG’s financial adviser, ANZ Investment Bank, Arab Petroleum InvestmentsCorporation (Apicorp), Bank of Tokyo-Mitsubishi, Bayerische Landesbank, Credit Lyonnais, HSBC, IntesaBci, Instituto San Paolo di Torino, Royal Bank of Canada, Royal Bank of Scotland, Banco Bilbao Vizcaya Argentariaand WestLB.

The 12-year, $550 million international tranche will have a step-up pricing structure. The margin starts at 85 basis points (bp) over Libor until completion, at which point it rises to 150 bp. Further steps take it up to 235 bp. The all-in average price is thought to be around 180 bp.

‘The international tranche was always flexible in size and we are looking at $550 million now, because it seems the local tranche is going to come in at the lower end – $150 million rather than the $200 million that was talked about for a period,’ says one of the potential lead arrangers.

The third tranche in the $1,150 million financing package comes in the form of a $450 million facility from the European Investment Bank (EIB – MEED 15:12:02). This tranche is itself divided into two similar sections. The first has a 15-year tenor and EIB is taking the political risk. The second slice has a 12-year tenor and the commercial banks are providing a guarantee.

‘If all goes smoothly, we are expecting syndication to be launched next April,’ says another potential lead arranger. ‘There is still a fair amount of work to do on this: we have still received no formal legal advice; the information package was fairly thin and the term sheet only runs to 30 pages.’

One of the remaining issues that could still affect the shape of ELNG’s financing is the public attempts by one of the project sponsors, Italy’s Edison International, to sell some or all of its shareholding in the project company.

‘This is a substantial issue but it does not really weaken the project,’ says a banker. ‘There are provisions in the term sheet, ensuring that if Edison leaves it will be selling to a company that meets certain credit rating criteria and industry standards. Anyway, Edison is a comparatively weak credit itself and if it backs out no huge value is removed.’

ELNG is owned by BG Groupof the UK, Edison International, Egyptian General Petroleum Corporation, Egyptian Natural Gas Holding Companyand Gaz de France (GdF). The project’s first train, under construction at Idku, is scheduled to start production in 2005. Its output of 3.6 million tonnes a year will be purchased by GdF. ELNG says it aims to have a second train in operation in 2006.