Qatar Petroleum (QP) will tap the financial markets for up to $5bn to finance the development of the Barzan gas field development

The company will borrow in the third quarter, said Meshaal al-Mahmoud, the head of project finance at QP, on the sidelines of MEED’s Qatar Projects 2011 conference.

The credit rating for the project will be completed by the end of the first,  the beginning of the second quarter, he said. QP itself is rated AA by Standard & Poor’s, and (P)A1 by Moody’s.

In November 2010, QP began approaching export credit agencies (ECAs) about financing the Barzan scheme, as a precursor to launching bank financing in 2011 (MEED 19:11:10).

“We are looking at all sources, export credit agencies, the bond market, commercial banks,” said Al-Mahmoud. “We will raise what is available to us then at the terms we find acceptable. We have given ourselves the flexibility to raise part of our needed capital in the next year or the year after.”

The borrowing will also include an Islamic finance tranche, in line with QPs traditional approach of including sharia-compliant loans in their project finance, as well as the desire to diversify sources of funding.

The typical tenor for QP’s project finance debt is 15 years, said Al-Mahmoud. This makes Islamic financing problematic, as such tenors are shorter than what can be arranged through conventional means. If a sukuk (Islamic bond) is issued, its tenor is unlikely to exceed five years.

QP owns 90 per cent of RasGas, the company charged with developing the Barzan gas field, with ExxonMobil holding the remaining 10 per cent.

The Barzan field will eventually deliver up to 2.5 billion cubic feet a day (cf/d) of natural gas for domestic use.

QP has raised $60bn in project financing for its various schemes. Al-Mahmoud said that while Qatar does not need to borrow to fund its projects because of an expected $132bn budget surplus over the next five years, “When there is financing, there is discipline, and more due diligence.”

The UK’s Royal Bank of Scotland is acting as financial adviser on the Barzan project.