Table of Contents

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EXECUTIVE SUMMARY

By Rod Morrison, Editor, Project Finance International, London, UK

  • Growth of the LNG debt market
    • Project financings
    • Regas financings
    • Ship financings
  • The future of LNG finance
    • LNG projects
    • New LNG opportunities
    • Capital requirements
  • Report outline

CHAPTER 01

LNG project financing summary

By Rod Morrison, Editor, Project
Finance International, London, UK

  • Introduction
  • LNG financings - Projects
    • Egypt
    • Indonesia
    • Malaysia
    • Nigeria
    • Oman
    • Qatar
    • Trinidad & Tobago
    • LNG project financings tabular data
  • LNG financings - Regas terminals
    • China
    • Portugal
    • Spain
    • UK
    • USA
    • Regas terminal financings tabular data
  • LNG financings - ships
    • Brunei
    • Malaysia
    • Nigeria
    • Oman
    • Qatar
    • South Korea
    • UK
    • Ship financings tabular data
  • LNG projects
  • Equity gas output
    • In operation
    • In operation and under construction
    • In operation, under construction and under development
    • In operation, under construction and under development plus future announced projects

Chapter 02

The Atlantic Basin LNG market

By Patricia Roberts, Director
LNG - Worldwide Ltd, and David Ledesma, Independent Consultant

  • Introduction
    • Arbitrage opportunities
  • Infrastructure
  • Key findings
    • Supply and demand balance
    • Successful project identification
    • Contract terms
    • New business models
    • Capacity issues
    • Financing
  • Overview
    • History
    • Geography
  • Atlantic Basin LNG supply and demand
    • LNG supply
    • LNG demand
    • LNG supply/demand balance
    • Other factors impacting supply and demand growth
  • Changes in LNG sales structures
    • LNG project structuring
    • Changing downstream markets - deregulation, new markets
  • LNG contracting
    • Equity positions
    • Duration of contracts
    • Volumes
    • Need for stable cash flow
    • Shipping and risk allocation
  • LNG buyers’ requirements
    • Market aggregation
  • Development of trading
    • Exposed volumes
    • Spare regasification capacity
    • Spare shipping capacity
    • Standard contractual terms and conditions
    • Credit-worthy counter-parties
    • Liquid transparent hubs
    • Arbitrage

Chapter 03

The Pacific Basin LNG markets

By Andrew Symon, Visiting
Research Fellow at the Institute of South East Asian Studies, Singapore

  • Overview
  • Japan
    • Demand for LNG
    • Government policy on nuclear energy
    • Market liberalisation
  • South Korea
    • Demand for LNG
    • Market liberalisation
  • Taiwan
    • Market liberalisation
  • Other sources of supply
    • Southeast Asia
    • Russia
    • Qatar
    • Iran
    • Australia
  • Contract innovation, flexible trade and spot markets
    • Price setting
    • Destination clause
    • Shipping practice
  • Conclusion - the consequences for financing

Chapter 04

The US LNG market

By Tim Evans, Senior Energy
Analyst, IFR Markets, New York, USA

  • Overview
    • Energy demand
  • Producers
  • Pipelines
  • Local distribution companies
  • Consumers
  • Obstacles to integration
  • Integration on a smaller scale
  • A variety of risks
    • Leverage
    • Basis risk
    • Spread risk
    • Price volatility

Chapter 05

The Chinese LNG market - developments and legal overview By Sam Farrands and Elisabeth Ellis, Major Projects Practice, Minter Ellison, Hong Kong

  • Overview
  • Natural gas
    • Natural gas production and demand
  • LNG terminal projects
    • Funding of LNG terminal projects
    • Securing offshore LNG supply
  • Impact of deregulation of the PRC’s electricity market
  • Overcoming legal challenges
    • Restrictions on foreign investment
    • Regulatory regime
  • Price constraints and pressures
    • Competitive pressure
  • Restrictions on foreign exchange and payment security mechanisms
    • Foreign exchange
    • Payment security mechanisms
  • Law governing contracts
    • When is PRC law required?
    • Choice of language for contract
  • Liability regime under PRC law
    • Liability for breach or anticipatory breach
    • Available remedies under PRC law
    • Liability for negligence
  • Dispute resolution options
    • Mediation
    • Litigation
    • Arbitration
    • The PRC’s domestic arbitration tribunals
    • Enforcement of foreign-related arbitral awards
  • Conclusion

Chapter 06

The Indian LNG market By Harsh Gupta, Investment Officer, International Finance Corporation (IFC), Mumbai, India

  • Overview
    • Demand-supply shortfall
  • Gas imports
  • Gas imports through pipelines
    • LNG imports
    • Key import issues
  • Price sensitivity
    • KG basin gas discoveries
    • Financing of natural gas/
  • LNG projects
  • Overview of project financing options
  • Debt financing
    • Future flow securitisation
    • Sovereign funding
    • International debt financing
    • International equity financing
  • Conclusion

Chapter 07

The European regas market

By Daniel O’Sullivan, Senior Reporter, Project Finance International, London, UK

  • Overview
  • Regas capacity demand growth
  • Spain
    • Regas operations
    • Project financing
    • Regulatory support
    • Commercial bank project financing
  • Italy
    • Capacity expansion
    • Regas schemes
    • Regulatory issues
    • Project financing structures
    • OLT options
    • Brindisi options
    • Gas market development
  • United Kingdom
    • Regas operations
    • Gas market price risk
  • The Netherlands
    • Project financing

Chapter 08

Rating LNG debt

By Peter Rigby, Director, Standard and Poor’s, New York, USA

  • Overview
    • Quick takes: LNG investmentgrade project fundamentals
    • LNG project financing characteristics
    • Assessing credit risk
  • Project level risk
    • The contractual foundation
    • Technology, construction and operations
    • Competitive market exposure
    • Legal structure
    • Counter-party exposure
    • Financial strength
  • Sovereign risk
  • Relative institutional risk
  • Conclusions: the outlook for investment grade LNG projects

Chapter 09

The LNG shipping market

By Richard Howley, and Scott McCabe, Norton Rose, London, UK

  • Overview
    • Natural gas as a source of energy
    • Growth in the LNG trade
    • The LNG shipping industry
  • A spot market for LNG
  • Financing LNG carriers
    • Corporate or project debt financing
    • Project financing
    • Corporate finance vs project finance, export credit finance
    • Leasing
    • Equity financing
    • Islamic financing
  • Contractual issues
    • Shipbuilding contracts and construction issues
    • Post-delivery vessel performance and operational issues
    • Lender issues and cash flow waterfalls
  • Conclusion

Chapter 10

LNG and regas financing case studies

  • Case study: NLNGPlus, Nigeria - legal issues
  • By Gbenga Oyebode and Kofo Dosekum, Aluko & Oyebode, Lagos, Nigeria
  • Overview
    • The NLNGPlus project
    • Project financing structure
    • Legal issues
    • Tax issues
    • Regulatory issues
    • Insurance issues
    • Government support for other projects
  • Case study: Qalhat LNG, Oman - financing innovations
  • By Katharine C. Baragona, Director, Infrastructure and Energy Finance, Citigroup
  • Overview
    • Integration advantages
    • Shared infrastructure
    • LNG SPAs
    • Gas supply
    • Project financing structure
    • Financing evaluation
    • Insurance
    • Qalhat LNG SAOC - details
  • Case study: Cheniere Energy, US - Sabine Pass LNG terminal
  • By Michael Whalen, Managing Director, HSBC Project and Export Finance, Americas
  • Overview
    • Choice of location
    • Linking finance and development
    • Project financing structure
    • Implications
  • Case study: Sempra Energy, US - integrated financing
  • By Chuck Zabriskie, Managing Director and Head of Project & Export Finance North America, Royal Bank of Scotland, USA
    • Overview
    • Integrated LNG and gas strategies
    • Project financing structure
    • Paving the way to single asset financing
    • Implications
  • Case study: Guangdong Dapeng, China - PRC receiving banks
  • By Bruce Macfarlane, Executive Director, Structured Capital Markets, ABN AMRO Bank
  • Overview
    • Special nature of the project
    • Project financing structure
    • Implications
    • Guangdong Dapeng LNG - details
  • Case study: Petronet, India - first LNG financing
  • By Sharon Klyne, Australia Editor, Project Finance International
  • Overview
    • The revenue profile
    • Expansion plans
    • Project financing structure
    • The loan structure
    • Syndication results
    • Market competition

LIST OF TABLES AND FIGURES

  • LNG project financings -
  • Table 1.1 Mandated lead arrangers
  • Table 1.2 Lead managers
  • Table 1.3 Sponsor loans
  • Table 1.4 Multilateral cover providers
  • Table 1.5 Completed financial advisory mandates
  • Table 1.6 Total debt raised for LNG projects by country, excluding refinancings
  • Table 1.7 Total debt raised for LNG projects by country, including refinancings
  • Regas terminal financings -
  • Table 1.8 Mandated lead arrangers
  • Table 1.9 Total debt raised for LNG regas terminals by country
  • Ship financings -
  • Table 1.10 Mandated lead arrangers
  • Table 1.11 Total debt raised for LNG ships by country
  • LNG projects -
  • Table 1.12 LNG projects by country
  • Equity gas output - in operation
  • Table 1.13 International oil companies
  • Table 1.14 National oil companies
  • Table 1.15 By country
  • Equity gas output - in operation and under construction
  • Table 1.16 International oil companies
  • Table 1.17 National oil companies
  • Table 1.18 By country
  • Equity gas output - in operation, under construction and under development
  • Table 1.19 International oil companies
  • Table 1.20 National oil companies
  • Table 1.21 By country
  • Equity gas output - in operation, under construction and under development plus future announced deals
  • Table 1.22 International oil companies
  • Table 1.23 National oil companies
  • Table 1.24 By country
  • Table 2.1 Supply projects to the Atlantic Basin, 2005-2020
  • Table 2.2 Atlantic Basin LNG demand, 2005-2020 (bcm)
  • Table 3.1 LNG demand in Asia Pacific, 1989-2004 (m/t)
  • Table 3.2 Forecast Asia Pacific LNG demand, 2005-2015 (m/t)
  • Table 3.3 Asia LNG contract expiry to 2011
  • Table 3.4 US (east coast) LNG import prices, 1995-2004
  • Table 5.1 LNG terminal projects in China
  • Table 6.1 Indian projected natural gas demand-supply gap, 2007, 2012, 2025
  • Table 6.2 Proposed LNG projects in India
  • Table 6.3 India - key project finance risks
  • Table 6.4 India - domestic loan market
  • Table 6.5 India - domestic capital market
  • Table 6.6 India - international loan market
  • Figure 2.1 Global LNG sales, 1964-2004 (mtpa)
  • Figure 2.2 Regional LNG production, 1990-2004 (mtpa)
  • Figure 2.3 Atlantic Basin LNG supply projects and regasification terminals
  • Figure 2.4 North Atlantic Basin LNG supply/demand, 2005-2020 (bcm)
  • Figure 2.5 The moving ground of LNG contracting
  • Figure 2.6 US gas pipeline network
  • Figure 2.7 LNG traded market
  • Figure 2.8 US, Japanese and Spanish gas prices, January 1996-April 2005 (US$/mmBtu)
  • Figure 2.9 Gas trading and Atlantic arbitrage, 1999-2004 (US$/mmBtu)
  • Figure 4.1 Net US imports of natural gas, 1970-2025 (tr cu ft)
  • Figure 4.2 Natural gas consumption by sector, 1990-2025 (tr cu ft)
  • Figure 4.3 Natural gas production by source, 1990-2025 (tr cu ft)
  • Figure 4.4 Lower 48 onshore natural gas production by supply region, 1990-2025 (tr cu ft)
  • Figure 4.5 Existing and proposed North American LNG terminals
  • Figure 4.6 Annual number of 6-hour periods for Category 3-4-5 hurricanes
  • Figure 4.7 US national gas prices, 2001-05
  • Figure 6.1 Primary energy source consumption, India vs rest of world, 2004
  • Figure 6.2 India - gas consumption by industry sector, 2005
  • Figure 6.3 India - sources of project finance
  • Figure 8.1 Representative Ras Laffan project structure
  • Figure 8.2 RasGas II and RasGas 3 transaction summary
  • Figure 8.3 Crude oil prices, 1949-2005 (US$/barrel)
  • Figure 8.4 Average global LNG import prices, 1996-2005e (US$/mmBtu)
  • Figure 9.1 Financing for LNG carrier building
  • Figure 9.2 LNG ship financing by Islamic lease structure
  • Figure 9.3 Islamic LNG ship financing, including Sukuk
  • Figure 10.1 Guangdong pilot project structure
  • Figure 10.2 Guangdong project contractual structure and flow of funds
  • Figure 10.3 Petronet contractual structure
  • Figure 10.4 Joint payment security structure