S&P affirms ratings on Oman LNG and Qatar unit

19 March 2003
International rating agency Standard & Poor's (S&P)announced on 19 March that had it affirmed its ratings on debt issued by Oman Liquefied Natural Gas (OLNG)and notes issued to finance Qatar's NGL-4 project.

S&P's said that the affirmation is for the A- long-term senior unsecured debt rating on OLNG's $1,300 million commercial bank facility following a review. The outlook is stable. S&P's has also affirmed its BBB+ long-term underlying debt rating on QGPC Finance (Cayman)'s $400 million senior secured export receivable-backed notes. The outlook is stable. The AAA ratings on $200 million of the notes, insured by Ambac Assurance UKand the AAA ratings on the other $200 million notes, insured by MBIA Insurance Corporation, were also affirmed.

'The rating actions follow a review of both projects' operations, insurance agreements, and the regional event and political risks as the threat of war in Iraq looms,' said S&P's credit analyst Rachel Goult. 'S&P's does not believe that the credit quality of either project has deteriorated as a result of increased political tensions in the region.'

S&P's says the affirmation of the rating on OLNG reflects the company's strong operational and financial results for 2002, and its demonstrated ability to mitigate Indian Dhabol Power Company's incapacity to take contracted volumes. The renewed insurance programme remains adequate and long-term sale contracts with Korea and Japan mitigate more than two-thirds of market volume risk. The ratings are expected to remain stable, based on robust project economic fundamentals and the credit enhancements that resulted in a rating that is two notches higher than the Omani foreign currency sovereign rating, S&P's said.

S&P's says that payment on QGPC Finance 2010 notes is supported by export receivables from the sale of natural gas liquids (NGL) produced the new NGL-4 project developed by state oil company Qatar Petroleum (QP). The affirmation reflects the near completion of its NGL-4 project after almost one year of construction delays. The project is in the final stages of start-up. Noteholders continue to benefit from full recourse to QP if QGPC Finance fails to sell enough product to cover its debt service obligations, S&P says.

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