Saturday May 26, 2012

Inpex, Total seek US$20bil loans for Australia LNG

SYDNEY: Inpex Corp and Total are seeking US$20bil in what could be the world’s largest project finance loan for their Australian LNG project, sources said, underscoring investor appetite for high-quality resource projects amid global financial turmoil.

Inpex, which is the operator of the Ichthys liquefied natural gas (LNG) project, has committed sales contracts, largely with thirsty Japanese utilities, making it juicier for investors.

The move comes a day after rival Origin said it raised US$8.5bil in project finance for an LNG project, illustrating investors are still warming to projects that are well advanced, despite emerging inhibition over cost blowouts.

BG and Woodside have already announced cost blowouts in their Australian LNG projects. Sources have indicated that Shell and Petrochina’s joint venture was likely to face a 50% cost rise.

Ichthys had already got its final investment decision in January, with construction set to begin, Inpex said on its website.

Japan, the world’s largest LNG importer, is racing to secure gas supplies as LNG substitutes for lost nuclear capacity, which accounted for a third of the country’s electricity production.

The US$34bil Ichthys project would have an initial capacity of 8.4 million tonnes of LNG a year and 1.6 million tonnes of liquefied petroleum gas a year, Inpex said. Inpex owns 72.8% and Total, 24% of the project.

More than half of the loans for the project are expected to come from export credit agencies, signalling the growing importance of government agencies in funding large projects as commercial banks, hit by global turmoil, stay away.

Ichthys lenders included Japan Bank for International Cooperation (JBIC), Australia’s Export Finance & Insurance Corp, France’s Coface, Export-Import Bank of Korea, KSure and Nippon Export & Investment Insurance, sources said.

The export credit agencies will provide US$5bil to US$6bil in direct loans, as well as insurance cover for at least half the remaining US$14bil to US$15bil.

This would leave US$7bil to US$7.5bil to be raised in the commercial bank market, said the sources, who declined to be named as the matter was confidential.

Inpex said it aimed to raise more than one trillion yen (US$12.59bil) in project finance for the project.

“The company has already agreed on major points of the financing with ECAs (export credit agencies) including JBIC, and is also in discussions with commercial banks,” a company spokesman said. — Reuters

Potential lenders had been approached to commit a minimum US$1bil, sources said, a hefty amount in the current market.

Bank funding is largely expected to come from Bank of Tokyo Mitsubishi UFJ, Mizuho Corporate Bank, which is also advising on the project, and Sumitomo Mitsui Banking Corp, as well as Australia’s four major lenders – Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corp.

In addition, strong participation is expected from French lenders, such as financial adviser Credit Agricole CIB and Societe Generale, according to the sources. — Reuters

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