Tangguh LNG Financing Agreement 2007
Release date:
29 October 2007
Jakarta, October 29, 2007 (BP Indonesia) – The Tangguh LNG partners and six banks confirmed today the signing of agreements for a US$884 million loan related to the construction of the Tangguh LNG project in Bintuni Bay, Papua. This tranche, the Fujian Tranche, marks the completion of all of the planned US$3.5 billion external financing for the third major LNG hub in Indonesia.
Following a competitive bid process, the Fujian Tranche is being provided by six banks from Europe, China and Japan. They are: Intesa Sanpaolo, Bank of Tokyo-Mitsubishi UFJ, DnB NOR Bank, Bank of China, the Royal Bank of Scotland and Mizuho.
As stipulated in the Tangguh LNG project’s initial financing plan, a total of US$3.5 billion was to be financed by international banks. Of the total, US$2.6 billion – known as the International Tranche – was secured in 2006.
For the remainder of the loan, BP invited 24 international and Indonesian banks to take part in a competitive bidding process. Of the 24 banks invited to bid, 16 responded with initial proposals while the remaining banks – including several from Indonesia – declined to participate in the negotiation process.
“It is important to note that the targeted US$884 million underwriting offer reached US$4.3 billion – or nearly five times the targeted amount. This is a strong indication that international banks and foreign investors see Indonesia as a country with a positive investment climate and little business risk,” BPMIGAS chairman Kardaya Warnika said.
The interest rate for the Fujian Tranche is highly competitive when compared to similar LNG projects around the world, or even in Indonesia. “This further confirmed the economical value for the project to be developed.” Kardaya added.
Another key aspect is that financial responsibilities for the total US$3.5 billion Tangguh LNG project loans will be borne only by the contractors without any recourse from the banks to the government or collateral from the government. Hence, these loans are purely the responsibility of BP and its partners. The Tangguh LNG project is now some 80 per cent complete and remains on schedule, and within the US$5 billion construction budget, for first gas in late 2008.
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