NEWS
RasGas expansion taps world capital markets
London, July 25 (LNG journal)
- Qatar's Ras Laffan liquefied natural gas expansion projects have started raising finance in the international capital and banking markets with a combination of bond sales and loans that could raise as much as $3.22 billion in the weeks ahead.
The US investment banks, Lehmann Brothers and Goldman Sachs, are running the bond sales and the Royal Bank of Scotland is advising on the loans. International debt rating agencies, Moody's Investors Service and Fitch Ratings, both said they are rating the RasGas bonds four notches below their "AAA" class reserved for top investment quality, citing risks mainly related to the scale of the projects.
"This is a large-scale project with robust economics, and the sponsors are very strong," said Laurence Monnier, an oil and gas industry debt analyst at Fitch Ratings. "The bonds should be readily taken up as they are quite a rare asset class in the LNG industry, which has mostly relied on bank loans."
The projects, known as RasGas 2 and RasGas 3 and owned by Qatar Petroleum and Exxon Mobil Corp, have a credit limit of $10 billion to invest in five new LNG liquefaction trains in Qatar , which will increase the company's LNG production to as much as 30 million tones per annum by 2010 from a current 4.7m tonnes a year.
Including Exxon Mobil's tranche of debt, this round of finance should raise about $4.6 billion in a fifty-fifty combination of bond sales and bank loans, sufficient to complete train 5 and a portion of train 6, analysts said. The bank debt will have 15-year maturity and the bond maturity will be 22 years.
The projects are exposed to some risks given their scope, however, analysts said. "As well as the construction of three new LNG trains and the infrastructure, the project also relies on the construction of new LNG terminals in the US and Italy ," said Monnier. In addition, two of the three new LNG trains will be larger than any currently in existence.
Analysts believe these risks are offset by the skills and experience of the companies involved, their prudent procurement strategy and experienced contractors. The debts are also underpinned by revenue projections.
When the projects go into full production they are expected to push total annual revenues to $8.6bln by 2010 compared with $758m in 2004 when only train 3 was in operation for 10 months.
