International Energy Association forecasts some $250 billion of investment in LNG business over the next 30 years.
"For bankers and advisors the day of the LNG specialist is therefore with us and has been so for a number of years."
A successful natural gas venture involves a series of independent projects in order to take gas extracted from the wellhead through processing, liquefaction, storage, transportation and regasification up to delivery of gas to the wholesale end customers. Traditionally, the various links in this chain were separately and independently developed, but this no longer holds true. An LNG project can therefore range from a narrowly defined "within fence" construction of, say , a facility to the creation of a massive multi-jurisdictional business that covers all or the major part of the energy chain. Recent examples of this latter phenomenon include the Qartar Gas II project and Phase 2 of the Sakhalin II project in Russia. It is not therefore possible in today's world to speak of a definitively of a single methodology for financing LNG projects as the underlying dynamics vary so widely and the scope for innovative financing structures increases. Financing techniques, and indeed financiers, have evolved rapidly to meet the greater opportunities and challenges which the industry now presents. While a number of financing structures remain along relatively straightforward and traditional lines ( e.g. single facility tolling structures or vessel financing on an asset-backed basis), the headline deals are now far more complicated and require a deep understanding of the issues arising throughout the energy chain.
To date, the LNG industry has raised more than $95bn of debt, according to Dealogic, of which over $60bn was for liqufaction projects, constituting over 50% of the total capital raised. But the assumption that capital always available for good projects cannot always be made, not only because of the global financial crisis, but also beacause of the sheer size of recent LNG Projects. Before 2009, most projects were financed primarily by commercial banks, aided by export credit agencies (ECAs) where political-risk protection was required. Around 30 commercial banks provided about two thirds of project finance lending volume and they were typically able to provide up to $2bn-3bn in aggregate for any one project adequate for most projects when combined with ECAs.
Nordic Partnership are looking at a range of innovative financial regasification structures for a client in order to optimize the funding having assembled a specialist LNG funding team with direct access to LNG funding both in terms of equity and debt.
Asia LNG Summit 2010 October 13th –14th, 2010 | Beijing, China
Asia LNG Summit 2010 October 13th –14th, 2010 | Beijing, China
For all enquiries contact Nordic Partnership +44 207 193 3604
