A Banker’s View on Financing and New Supplies

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lng_market_analysis
Published 10/23/2012 by Standard Chartered

Volume and Price

During the last round of Qatargas and Rasgas transactions, Lenders have demonstrated a greater capability to take price risk on US, Europe and Japan indexes such as Henry Hub, NBP and JCC based formulae – but volume risk had to be fully covered

 

However in recent transactions tolling / quasi tolling models have been re-emphasized (US exports, Tanghuh)

 

Project finance lenders seem keen to use major gas aggregators as a buffer

 

Players

LNG is not yet a freely traded commodity and a large portion of the market is still controlled by a small number of exporters and importers

 

Nevertheless, the number of players is increasing dramatically thanks to arbitrage opportunities and technology developments (Floating Regas and liquefaction, “mini” LNG…)

 

Some seasoned LNG buyers are moving into the ‘Operatorship’ domain (INPEX’s Ichthys and Abadi)

 

A Capital Intensive Business


Availability of funds is critical for LNG developers, and new players are more likely to use project finance than oil majors

 

During financial crisis, ECAs have stepped into the gap in order to support access to strategic resources (APLNG, PNG…)

 

Debt tenors, constrained by Basell III capital requirements and the availability of USD funding following European Sovereign Debt crisis are negatively impacting the availability of funds

 
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