Société Générale Corporate & Investment Banking (SG CIB) and BNP Paribas have arranged a landmark limited recourse financing for a US$320mn project related to the construction of two liquefied natural gas (LNG) carriers. This shipping project is sponsored by Oman Shipping Company (80%) – a company fully owned by the government of the Sultanate of Oman – and Mitsui OSK Lines (20%).
These two gas carriers Salalah LNG and Ibra LNG will be time chartered on a long-term basis to Qalhat LNG, which owns and operates a natural gas liquefaction train and associated infrastructures in Qalhat, southeast of the Omani capital, Muscat.
Salalah LNG will enter into service in December 2005 and Ibra LNG will be ready in mid 2006. Each of the vessels has a capacity of 147,000 cubic metres. They will be used by Qalhat LNG to transport liquefied gas from Oman to various parts of the world under long-term sale and purchase agreements. This will further strengthen the Sultanate’s leading position as a LNG producer and marketer.
The gas carriers are being built by Samsung Heavy Industries in South Korea.
SG CIB and BNPP, joint mandated lead arrangers, structured a financing package made up of a lease arranged by SG CIB and funded on a limited recourse basis by:
- A 12-year commercial credit facility (BNPP acting as arranger, sole underwriter, bookrunner and global facility agent) and;
- A 12-year export credit supported by KEIC (Korea Export Insurance Corporation) and jointly arranged by SG CIB and BNPP (SG CIB acting as KEIC agent).
This financing structure is the first of its kind, and as such represents a landmark transaction for the banks and KEIC.
It is the first ever export finance deal supported by KEIC for LNG tankers, the first export financing supported by KEIC for ships in a limited recourse finance structure and the first export finance deal covered by KEIC which is combined with a lease.