Global Energy Report
The international liquefied natural gas (LNG) industry is in a period of significant change. Companies are facing a series of new commercial challenges, a diverse range of new opportunities, and significant potential growth in LNG trade. At the same time, corporate needs, market and technological factors, environmental issues, and the nature of many LNG opportunities are combing to increase the level of competition in the business. By Rodney Schmidt, Managing Director, PFC Energy.
State-owned Mexican oil and gas behemoth Pemex isn't quite ready to marry the private sector, but it's considering a live-in arrangement with the international petroleum industry to accomplish a major goal: the company must invest or attract US$72bn over the next decade to spur development of dry gas fields, develop new oil reserves and begin work on new offshore oil and gas developments. By Nicole Gelinas.
It's no secret that some project finance banks in the North American market have significantly curtailed their activities after a wrenching couple years where they found that tight structures don't necessarily insulate lenders from sponsor risk. As the market shifts toward new investors, project deals increasingly are being shown to hedge funds that have played a pivotal role in utility restructurings. By Chris Donnelly, director, Standard & Poor's LCD.
Edison Mission Energy took advantage of the popularity of Term B power deals earlier this year and moved in quickly to complete the crucial refinancing of its Midwest assets. The recent upgrade of the assets' offtaker - the once-troubled Southern California Edison - also proved a major selling point for the complex deal. By Alison Healey.
The Guangdong Dapeng LNG import terminal and trunkline project was successfully closed on April 30 2004 with the signing of financing documents and commercial contracts witnessed by China's vice premier, Zeng Pei Yan, at the People's Great Hall of China in Beijing. The conclusion of the financing agreements and major commercial contracts evidenced the achievement of a significant milestone of the project. People in Guangdong Province will soon benefit from the use of cleaner air energy when the project completes in 2006. By Bruce Macfarlane, executive director, structured capital markets, ABN Amro Bank.
Competition for the sale of oil and gas is intensifying in the region and Indonesia, the major oil & gas producer in the region, is faced with new challenges. Not only does it have to market its gas aggressively in the region and across the Pacific Ocean, but it needs to put its own house in order. It will need to finalise soon the liberalisation process of the energy sector, so that the much needed foreign investors will return. Minerva Lau writes.
Malaysian oil and gas monopoly Petronas is a leading exporter of LNG in the North Asian market, particularly in Japan, South Korea and Taiwan. However, to develop new sources and markets, it has been expanding further with LNG investments in the Middle East. By Sharon Klyne.
The recently-closed financing for the 1434MW coal-fired BLCP power plant in Rayong, Thailand, marks another milestone in the return of the project finance markets in Asia and the use of innovative financing techniques to deal with the constraints of the debt markets. By Paul S Elliott of Baker & McKenzie, which acted for the project company.
Egyptian LNG, a natural gas liquefaction facility developed by EGPC and EGAS, the Egyptian state oil and gas companies, BG Group, Petronas and Gaz de France, represents Egypt's largest ever project financing to date and its first ever major project financing in the oil and gas sector. As a result of the project (including its second train which is currently under construction), Egypt is set to become the world's seventh-largest exporter of liquefied natural gas (LNG) by 2006. By Kenneth MacRitchie, Adam Cooper and Tim Pick of Shearman & Sterling LLP, legal advisers to the sponsors.
The UK independent oil & gas sector has seen a flurry of activity over the last year or so, with both established names and start-ups attracting a mix of funding through listings, private equity deals and debt. There is very little real project financing out there, however with the size of the companies involved and borrowing base-type deals very much the norm as far as debt goes, a lot of this activity has a project-type feel. By Daniel O'Sullivan.
The Mozambique-South Africa natural gas pipeline project is an entirely indigenous African initiative, conceived and led in Africa, by Africans. Sponsored by Sasol, the South African based petrochemical company, the transaction also saw the Standard Bank of South Africa lead arrange the commercial bank tranche and the Development Bank of Southern Africa the multilateral/developmental tranche. By Greg Fyfe, head of structured political risk, project finance, Standard Bank.
If there is one picture that symbolises the current boom in the global liquefied natural gas (LNG) market, it is the LNG ship with the camel shaped spherical LNG containers. This is not withstanding the fact there are two types of LNG ships, the camel and a square container ship which is now proving more popular in the marketplace. Nevertheless the camel always comes out to illustrate LNG. And it needs financing, in fact of a lot financing. By Rod Morrison.