Qatar Petroleum (QP) and the US’ ExxonMobil are planning to approach banks for financing the development of the Barzan gas project in late June, according to sources close to the project.
The project will require about $5bn of debt, split between commercial bank loans, export credit agency loans and a bond issue. Sources close to the deal confirm that Islamic banks are expected to be invited to take part in the financing, but that the final deal may not include a Sharia compliant tranche if the banks are not able to offer competitive pricing.
The approach to banks in late June is around a month later than originally planned, as negotiations with export credit agencies (ECAs) are still under way (MEED 29:04:11).
At least two ECAs are in talks to provide direct loans to the project, Japan Bank for International Corporation and the Export-Import Bank of Korea (Kexim). Japan’s Nippon Export and Investment Insurance (Nexi) and Korea Export Insurance Corporation (KEIC) are also expected to provide loan guarantees to the project.
The UK’s Royal Bank of Scotland, which is acting as financial adviser to the project sponsors, is still in negotiations with the ECAs to finalise their commitments, and will launch the deal to banks once those talks are further advanced. “The strategy is to get as much from the ECAs as possible in direct loans because it is a large project,” says one banker close to QP.
The deal is expected to capitalise on bank appetite for Qatar exposure. “We have already had a huge interest from banks that had largely got out of the project finance market over the past few years,” says one source close to the project.
The deal is expected to have a tenor of about 15 years and financial close is being targeted for the fourth quarter.