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December tie-up for Sak II
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It is anticipated that roughly US$5bn of project funding for the Shell-led
Sakhalin II offshore project in the Russian Far East will be tied-up with
the core lending group some point this month. This core lending group is
purely export credit / multilateral agencies, namely JBIC, ECGD, EBRD and US
Exim. The deal will then be approaching the bank market for first-tier
commercial bank underwriters/arrangers in late Q1/early Q2 next year.
JBIC will be the largest lender in the core group, taking up to US$2bn -
this will likely come as a direct loan. The remaining US$3bn or so will be
split among the others, with US Exim set to be the smallest lender. It is
the commercial bank slots on these tranches that the potential arrangers
will be looking at - the exact mix between the agencies and types of cover
still has yet to be determined by the procurement pattern. The end of the
transaction will also probably involve other export credit agencies. CSFB is
the sponsor's financial advisor and ABN Amro is currently advising the
core-lending group.
As previously reported, sponsor Sakhalin Energy has put lenders on notice
that it will be asking them to push the envelope on what is considered
sufficient contracted anchor offtake for the 9.6mtpy LNG element that is the
centrepiece of the project. The project currently has some 3.4-3.8mtpy in
long-term sales already accounted for, thus far only to Japanese utilities,
however, Sakhalin Energy says it hopes to add more deals with customers in
both the Far East and also possibly the US early next year.
While project funding for the deal is being concluded at the core lender
level, a coalition of US-based conservationist groups is now seeking to
block the US Exim loan coverage to the development on the grounds that it
will threaten the critically endangered Pacific grey whale population.
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