Orange and Cool Greyyour name
The use of the Capital Market to fund the Ras Gas Project.
Group 3
FACTS AND FIGURES
Stakeholders and Participants
State of Qatar: Qatar General Petroleum Corporation (70% stack in Ras Gas)
Mobil Corp : Mobil QM Gas. Inc. (30% stack in Ras Gas)
Republic of Korea (S&PA 50% for 25 years)
Korea Electric Power Corporation (S&PA 34.7% 25 years)
Korean Regional Govt. (S&PA 15.3% 25 years)
Goldman Sachs was the financial advisor
Onshore EPC contractor: JGC corporation ( M.W.Kellogg company)
Platforms EPC Contractor: McDermott-EPTM East, Inc.
Pipelines EPC Contractor: Saipem S.p.A
Commercial Bank: Industrial Bank of Japan and Credit Suisse.
Guarantors: USEXIM,ECGD,SACE.(Export Credits Agencies)
Right to Develop capacity: 10 million tons per year (LNG).
Presently Constructing : 5.2 million ton per annum.
Project cost : $3.4 billion (including interest during construction)
Debt: Equity ratio : 75: 25
Sources of Cash Flow
20%-25% from sale of condensate.
Sale of liquid hydrocarbon on spot basis.
Sources of Financing (DEBT)
Banks: $1.35 billions ( including Commercial banks & ECAs)
your name
Market’s Unfamiliarity with Qatar
Perceived Risk of the Middle East.
Large no of project being development.
Uncertainty of Cash Flow and repayment.
Uncertainty of Production.
*
Make financing part of competitive bidding process.
Make use of Company’s leverage with the contractors, which in turn put pressure on Banks to be aggressive.
To encourage the contractor to source the equipments from countries with active and supportive export credit program.
Contractors would be very helpful in explaining and marketing the project to the banks and ECA’s.
*
Longer Maturity
Cost Saving due cheaper than other sources
Funding construction of the first train with no conditions precedent tied to further LNG sales.
*
Bond Marketing Strategy
Ras Gas was expected to appeal to broader group of investors based on its strong credit rating, strategic importance to sponsors and growth potentials.
Good credit rating from both agencies, Moody’s (A3) and S&P (BBB+)
Offering was structured in two tranches
Shorter Tranche ( 10 Yr maturity and 7 Yr Average Life)- 33%
Longer Tranche (17 Yr Maturity and 15 Yr Average Life)-67%
your name
Market Perceptions
It is a important component of Qatar’s national strategy.
It is a key part of Mobil’s development of LNG as a cornerstone of company’s growth strategy.
Korea’s national objective to increase the growth of LPG consumption in all the areas.
Sponsors would be increasing their equity investment over time and building a company with greater resource and diversified group of buyers.
your name
5%
To resize chart data range, drag lower right corner of range.
Chart1
Banks
1%
To resize chart data range, drag lower right corner of range.
your name
Conclusion
Capital market proved to be a valuable component of the Ras Gas financing.
Capital market can provide an effective counterbalance to the role of the banks and ECA’s.
The $2.5 billion of demand generated for the Ras Gas offering clearly demonstrates that the capital markets are available in significant size for well structured project financings with strong sponsorships.
your name
Discussion Question
your name
Thank you