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Friday, 15 October 2010

The future of LNG finance



PNG LNG shows strong projects can secure financing, write Robin Baker, Frederic C Rich and John J Anselmi

LIQUEFIED natural gas (LNG) finance has a great track record. To date, the LNG industry has raised more than $95bn of debt, according to Dealogic, of which over $60bn was for liquefaction projects, constituting over 50% of total capital raised.
But the assumption that capital is always available for good projects cannot always be made, not only because of the global financial crisis, but also because of the sheer size of recent LNG projects. Before 2009, most projects were financed primarily by commercial banks, aided by export credit agencies (ECAs) where political-risk protection was required. Around 30 commercial banks provided about two-thirds of project finance lending volume and they were typically able to provide up to $2bn-3bn in aggregate for any one project – adequate for most projects when combined with ECAs


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