Thus far this year, nearly $30 bill has been raised for liquefaction plants in the US and Australia, Poten & Partners’ Melanie Lovatt revealed during a webinar.
In the US, two final investment decisions (FIDs) were taken this year - Venture Global’s Plaquemines LNG, which raised $13.2 bill from a consortium of banks and Cheniere’s Corpus Christi Stage 3 project for which $6.6 bill was also raised from banks.
In Australia, $3.6 bill was raised for Pluto Train 2’s expansion project, while the giant Ichthys facility was refinanced to the tune of $4.7 bill by banks and a further $1.3 bill from the bond market.
One of the keys to unlocking project finance was the signing of long term contracts with credit worthy customers, she explained. Banks need sufficient debt service coverage ratios to ensure the loan is paid back.
In the US, developers can re-finance their portfolios when project construction is advanced or finished.
However, globally bank funding costs are rising, as are base rates, so the developers may pass on these increasing costs to their customers in the future.
She said that funding was still available from banks for well-structured liquefaction projects underpinned by strong commercial arrangements. However, the bond market was not so keen on new projects.
US projects with US Federal Energy Regulatory Commission (FERC) authorisation will sell out soon, she warned. Those projects without the permits face higher costs and longer lead times.
Lovatt also revealed that NextDecade’s Rio Grande LNG project’s three trains could be sanctioned soon. Financing can be secured for up to 75% of the costs with the involvement of Chinese banks.
In addition, Delfin Midstream could sanction one 3.5 mill tonnes per annum FLNG after agreeing 2.5 mill tonnes per year export contracts for 15 years. The unit is to be built by Samsung Heavy Industries for $600 per tonne, she advised.
Others which could be sanctioned next year include Lake Charles LNG, Tellurian’s Driftwood project (see page 2), and Port Arthur LNG.
Single buyer
She also said that the whole of Freeport LNG’s production could go to a single buyer.
In general, FERC is taking longer to assess US projects and the process is becoming more costly for a developer. Both Commonwealth LNG and CP2 LNG’s FERC processes have been delayed, due to issues with the environmental impact statements (EIS).
Summing up, she said that the current bullish market situation is likely to last for the next few years, which should be good news for US developers.
****Stabilis Solutions has received authorisation from the US Department of Energy (DoE) to export domestically produced LNG to all free trade and non-free trade countries, including Asian, European, and Latin American importing nations.
The DoE has allowed Stabilis to export on its own behalf, or as agent for others, up to the equivalent of 51.75 bill cu ft per year of domestically produced LNG for 28 years.
"The DOE's approval provides us with the ability to assist in the world's current energy crisis, as well as longer term capabilities to facilitate the world's transition to cleaner energy sources," said Westy Ballard, Stabilis’ President & CEO. "And we look forward to working with our customers to commercialise these exciting export opportunities."
