It is – by some margin – the biggest commercial facility arranged in the Middle East, and is significant not only for the depth of available liquidity demonstrated for a well-structured Qatari project, but also for the expansion of the pool. Among the 36 lenders are a number of financial institutions with little or no track record for structured lending in the region.
Indicative pricing on the 15-year facility is in line with expectations. The step-up structure is understood to start at 50 basis points (bp) during the four-year construction period – during which a sponsor’s guarantee is in place. Post-completion, it will step up from 95 bp to about 125 bp.
Specific bank roles on the transaction were to be announced in late August. General syndication is planned after loan signing
There is a strong possibility that the commercial debt package will be reduced prior to financial close, scheduled for November, with banks positions shrunk on a pro-rata basis. Bankers following the transaction say that Qatargas II is still looking to secure a substantial export credit tranche from the US’ Export-Import Bank and Italy’s Sace totalling about $1,000 million, and that this will trigger a scaling back of the commercial facility. The financing, which will cover the costs of the two-train plant at Ras Laffan, will also include an Islamic tranche, expected to be in the region of $500 million. Bank proposals for the tranche have recently been submitted.
Qatargas II will finance separately its planned gas-receiving terminal at Milford Haven in Wales. A sterling-denominated bond of about $600 million is envisaged.
The integrated Qatargas II project involves the delivery of 15.8 million tonnes a year (t/y) of LNG into the UK, with the first deliveries due in late 2007. Qatargas II is a joint venture between Qatar Petroleum (QP)
and the US’ ExxonMobil Corporation
. Its financial adviser is Royal Bank of Scotland
; the project legal counsel is White & Case