BP, CNOOC hire 7 lenders for a $1.3b Tangguh loan
BP, CNOOC hire 7 lenders for a $1.3b Tangguh loan
Denise Kee, Bloomberg/Singapore
BP Plc and CNOOC Ltd. have hired seven banks to help arrange a S$1.3 billion loan to develop the Tangguh liquefied natural gas project in easternIndonesia, a banker involved in selecting the lenders said.
The seven banks, Bank of Tokyo-Mitsubishi, BNP Paribas SA, Fortis Bank SA/NV, ING Groep NV, Mizuho Corporate Bank, Standard Chartered Plc and Sumitomo Mitsui Banking Corp., will be informed today of the mandate, which is decided by the state oil regulator BP Migas, BP and CNOOC, the banker said. The 7 1/2- year loan, which will be signed January, is part of S$3.5 billion in financing for the project, which will cost about $$6.5 billion.
The Tangguh LNG plant, the biggest such project in Asia, will help Indonesia, the world's largest LNG seller, to meet its export commitments as its reserves in the fields in Aceh province, operated by Exxon Mobil Corp., are depleting. Indonesia supplies countries including Japan, Taiwan and South Korea with about 25 million tons a year of LNG.
In an effort to stem the output decline, the country may allow foreign energy companies to explore in remote areas for the first time, using proceeds from their oil- and gas-producing units elsewhere in Indonesia, Kardaya Warnika, chairman of the state oil regulator BPMigas, said yesterday. This follows a move in June to scrap taxes on equipment imported for exploration, part of the government's initiative to lure energy investors.
"Most of the LNG-related financing will likely be for projects in Indonesia and Papua New Guinea," said Joris Dierckx, Head of Export and Project Finance Asia of Fortis Bank. "These countries have lots of gas reserves and they need money."
In addition to the Tangguh LNG plant, which is scheduled to start production in 2008, CNOOC is planning to build a LNG plant in Papua New Guinea to meet its rising demand for LNG, the country's Petroleum and Energy Minister Moi Avei said on Dec. 5. The project will revive a now-defunct BP Plc-led proposal for a 4.5 million-ton-a-year LNG plant. CNOOC in June forecast China's demand for LNG imports may rise to 20 million tons a year by 2010 and as high as 60 million in 2020, as the country promotes the use of cleaner-burning fuels.
LNG is natural gas that has been chilled into liquid form so that it can be transported on a ship. Buyers turn LNG back into gas so it can be piped to power plants and households.
The rest of the S$3.5 billion will come from the Asian Development Bank, the Japan Bank for International Cooperation and a group of Chinese lenders.
The loan will be divided into two portions. BP and CNOOC will guarantee a portion each and have appointed Societe Generale SA as their financial adviser.
The project will build two LNG trains with capacity to produce 7.6 million tons per year of LNG. The development will include gas production facilities, a seaport and airfield.
BP owns 37.16 percent of the project, making it the biggest investor. CNOOC is the second-largest, with 16.96 percent.
Other investors include Mitsubishi Ltd., Japan's largest trading company, and Inpex Corp., Japan's biggest oil explorer. They hold a combined 16.3 percent in Tangguh. A Nippon Oil Corp.- led company has a 12.23 percent stake and LNG Japan, owned by Sumitomo Corp. and Sojitz Holdings Corp., holds 7.2 percent. Japan National Oil, Kanematsu Corp. and Mitsui & Co.'s Overseas Petroleum Corp. unit hold a combined 10 percent.