In one of the largest oil and gas deals of the year, Dolphin Energy signed a US$4.1bn debt package involving a multitude of financing sources to refinance existing project debt.

The debt financing comprises a number of tranches, including a US$125bn, 10-year bond (the final tranche to be completed in July 2009); a US$1.42bn, 10-year commercial loan tranche; a 10-year, US$218mn Sace-covered tranche; as well as US$1.225bn in loans provided by two of the project sponsors – Total and Occidental Petroleum Corporation.

The bank loans were oversubscribed in syndication, with the commercial tranche raising US$2.6bn and the Sace tranche US$400mn. Both loans were scaled back after the bond issue.

The Dolphin project is the first inter-country energy project in the Middle East. It encompasses the production of gas from Qatar’s North Field and the delivery and sale of gas to customers in the UAE and Oman. It also involves the production, storage and sale of condensate, liquefied petroleum gas and sulphur into the global commodity markets; and the production and sale of ethane to Qatar Petroleum to supply Qatar’s petrochemical industry.

The scheme currently pumps around 2 billion cubic feet of gas per day to several emirates within the UAE and to Oman. Investment in the project comprises wells, sea lines, a processing plant, export pipeline and receiving facilities.

The project was initially financed in 2005 through a combination of equity and debt provided under conventional and Islamic bank facilities that were guaranteed by the three sponsors – Mubadala Development Company, Total SA and Occidental Petroleum Corporation.

The new financing is more than the original loan because some of the funds will be used to partially fund the construction of the Taweelah Fujairah pipeline (an onshore pipeline system in the UAE).

The original facilities were due to expire by the end of July 2009.

The deal is a landmark transaction as a result of the complex structure and security arrangements driven
by the cross-border nature of the project and sponsors’ reserve booking imperatives.
Deal information

Sponsors: Mubadala Development Company (51%), Total SA (24.5%), Occidental Petroleum Corporation (24.5%)
Amount: US$4.113bn
Mandated lead arrangers: WestLB, National Bank of Abu Dhabi, Export Development Canada, Société Générale, Abu Dhabi Commercial Bank, First Gulf Bank, The Royal Bank of Scotland, Crédit Agricole CIB, The Bank of Tokyo-Mitsubishi, BNP Paribas, Bayerische Landesbank, Samba Financial Group, Sumitomo Mitsui Banking, Standard Chartered, Natixis, KBC Bank, Lloyds TSB, National Australia Bank, Union National Bank, Crédit Industriel et Commercial, Arab Banking Corporation, The Commercial Bank of Qatar, Arab Bank, Europe Arab Bank, HSBC Bank
Financial advisory: RBS
Law firms: Sullivan & Cromwell; Sherman & Sterling
Tenor: 10 years
Date signed: July 27, 2009