Middle East LNG first gets financial backing

Industry news
Industry news

The first LNG receiving and regasification terminal in the Middle East developed on a PPP basis, has completed limited recourse financing for the project.

Bahrain LNG WLL is jointly owned by the Oil and Gas Holding Company and a consortium consisting of Teekay LNG, Gulf Investment Corporation (GIC) and Samsung C&T (Samsung). Financing a project of this size and complexity is a landmark in the regional financial markets.

A syndicate of nine international and regional banks is participating in the $741million loan which has a tenor of 20 years, Korea Trade Insurance Corporation (K-SURE) provided commercial and political risk cover for approximately 80% of the financing. Standard Chartered Bank, Arab Petroleum Investments Corporation (APICORP), and the Korea Development Bank acted as pathfinder banks.

Shaikh Mohamed bin Khalifa Al-Khalifa, Minister of Oil, said: “The Bahrain LNG Import Terminal is a key component of our plans for the further expansion of the energy and related sectors of the Kingdom of Bahrain. The achievement of financial close is a critical milestone in the continued development of the Bahrain LNG Import Terminal Project and we congratulate the sponsors, their supporting lenders and K-SURE on their achievement after many months of sustained effort.”

The project will have a capacity of 800 million standard cubic feet per day and will be owned and, once completed in early 2019, operated under a twenty-year agreement. It will comprise a Floating Storage Unit (FSU), an offshore LNG receiving jetty and breakwater, an adjacent regasification platform, subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and an onshore nitrogen production facility.

Mark Kremin, chief executive Teekay LNG, said: “Achieving financial close is an important milestone for the project and we congratulate the project teams on this great achievement. We look forward to continuing this strong partnership, including providing the project with an FSU, and ensuring this strategically important project is completed on schedule.”

Ibrahim Al-Qadhi, CEO of GIC, added: “Achieving financial close on a project of this complexity, in this market, is indeed a great achievement. We committed considerable resources and were determined to see this project completed on schedule. This project highlights the role of GIC in developing pioneering and commercially viable infrastructure projects that are essential for the development of the GCC economies.”

The project is being developed to supplement local gas production in Bahrain and ensure capacity to meet peak seasonal gas demand and industrial growth. It will also enable Bahrain to procure internationally-traded LNG on a competitive basis.