Novatek working on $11 bln Arctic LNG 2 financing
Two boots make a pair
Courtesy to Google translation
The same foreign banks as for the first one will be thrown into the second project of NOVATEK
Newspaper "Kommersant" No. 55 of 03/31/2021, p. 1
Kommersant has learned the approximate structure of external financing for NOVATEK's Arctic LNG-2 project. The shareholders will raise about $ 11 billion from international and Russian banks, which will cover just over 50% of the project cost. Up to half of the debt financing, according to Kommersant's information, will be provided by VEB.RF, Sberbank and Gazprombank, and the pool of foreign banks will be the same participants that provided funds for NOVATEK's first project, Yamal LNG.
NOVATEK intends to attract financing of Russian and foreign banks in the amount of about $ 11 billion for Arctic LNG-2, with a total cost of the LNG plant of $ 21.3 billion. Thus, project financing may amount to 51.6% of the total cost of Arctic LNG-2 », The rest of the funds will be provided by the shareholders themselves. Taking into account the fact that the shareholders intend to finance the project proportionally, NOVATEK's contribution may amount to $ 6.2 billion.
Arctic LNG-2 is NOVATEK's second gas liquefaction project after Yamal LNG, 60% from NOVATEK, 10% each from Total, CNPC, CNOOC and the Japanese Mitsui and JOGMEC consortium. Three lines of 6.6 million tons of LNG per year are planned for the project, the first stage is planned to be launched in 2023, the second - in 2024, the third - in 2026. The pool of Russian banks includes VEB.RF, Sberbank and Gazprombank, in total they will provide almost half of the total volume of debt financing, up to $ 5 billion, Kommersant sources note. The remaining external financing will be closed by foreign banks - the China Development Bank (CDB), the Export-Import Bank of China (CEXIM, The Export and Import Bank of China), the Bank of Japan for International Cooperation (JBIC), Intesa Sanpaolo, and Raiffeisen Bank International AG. To what extent each of the banks will participate in financing, Kommersant's sources do not specify.
NOVATEK brought up the issue of approving a number of transactions and agreements related to external financing of Arctic LNG-2 at the annual meeting of shareholders on April 23. According to the company, the dissenting shareholders will be able to sell the securities for 1.256 thousand rubles. per piece (the current price on the Moscow Exchange is about 1.49 thousand rubles).
Leonid Mikhelson, head and main owner of NOVATEK, January 23, 2020
We do not know how to fight off those who want to finance, that is, we do not experience any difficulties. Probably, the dialogue will drag on a little - we want to get better conditions for any restrictions compared to Yamal LNG - Leonid Mikhelson, head and main owner of NOVATEK, January 23, 2020
The same pool of banks participated in the project financing of the Yamal LNG project, which amounted to $ 19 billion at a project cost of $ 27 billion. Then, Yamal LNG, among other things, received $ 2.4 billion from the National Welfare Fund. Yamal LNG also attracted credit lines from Sberbank and Gazprombank (totaling € 3.6 billion), CDB and CEXIM (€ 9.3 billion and 9.8 billion yuan), from Intesa under the insurance coverage of Italian and French export credit agencies Sace and Coface (€ 750 million), as well as JBIC (€ 200 million).
In the case of Arctic LNG-2, the contribution of Asian banks will be less than in the implementation of Yamal LNG, since they require more stringent financing conditions, Kommersant's interlocutors note.
Arctic LNG-2 seeks a way to Asia
Antonio Fallico, the chairman of the board of directors of Banca Intesa (controlled by the Italian Intesa Sanpaolo), has repeatedly announced public interest in providing project financing for NOVATEK's project. At the end of January 2021, Deputy Chairman of the Board of Sberbank Anatoly Popov said that in December 2020 the bank approved the provision of financing for the project in the amount of up to € 3 billion.
Sberbank declined to comment further, while VEB.RF considered it premature to comment on its participation in financing the project. Gazprombank noted that they are interested in financing this project, but it is too early to disclose the details of the transaction. Foreign creditors did not respond to Kommersant's inquiries.
The debt-to-equity ratio will be about 50% to 50%, while usually in the construction of LNG plants, the share of borrowed funds is about 70%, notes Dmitry Marinchenko from Fitch.
This, in his opinion, will require more significant initial investments from NOVATEK's partners, but will allow the project to pay off debt faster or pay higher dividends. He recalls that NOVATEK's shareholding will be mainly financed through the sale of shares in the project to partners, which will allow the company itself to maintain a low debt burden.
Tatiana Dyatel
Similar but shorter article in English: https://www.offshore-energy.biz/novatek-working-on-11-bln-arctic-lng-2-financing/
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