Conoco, Origin Get $8.5 Billion for LNG Project in Australia
Stock Chart for Origin Energy Ltd (ORG)
ConocoPhillips (COP) and Origin Energy Ltd. (ORG), partners in a $20 billion liquefied natural gas project in the Australian state of Queensland, obtained $8.5 billion in loans from banks and export credit agencies.
The Australia Pacific LNG project reached agreements with the Export-Import Bank of the U.S., the Export-Import Bank of China and a group of Australian and international banks, Sydney- based Origin said today in a statement. The funding depends on the partners approving the second phase of the project, a decision expected by mid-2012, Origin said.
“It represents one of the largest project finance facilities in Australia,” Karen Moses, Origin’s executive director of finance and strategy, said in the statement.
The venture is among $170 billion of LNG projects being built in Australia to meet rising Asian demand for the fuel. Japan’s Inpex Corp. (1605) planned to start marketing loans of as much as $20 billion to banks last month for its Ichthys LNG project in Australia, according to a person familiar with the matter.
Costs to build Australian LNG developments are rising, with BG Group Plc (BG/) saying May 3 the bill for its LNG venture jumped 36 percent because of Australian dollar gains, rising labor and material costs and higher regulatory expenses. Origin said today that its project is on schedule and budget.
Shares of Origin rose 0.7 percent to A$12.91 in Sydney, while the benchmark index slipped 0.3 percent.
Origin and Conoco, the largest U.S. independent oil and gas producer by market value, approved the first stage of the venture in July. Shipments from the initial unit, or train, estimated to cost $14 billion, are scheduled to begin in 2015.
ANZ, Bank of China
“We see this as a step to both lower the cost of funding and also reduce refinancing risk faced by Origin,” Macquarie Group Ltd. said today in a note to clients.
Origin had A$5.5 billion of cash and undrawn debt at the end of last year, the company said in February.
The 15 banks providing the financing include Australia & New Zealand Banking Group Ltd. (ANZ), Bank of China Ltd. (3988), Societe Generale SA (GLE) and the Bank of Tokyo-Mitsubishi UFJ Ltd. The banks and U.S. export credit agency signed finance agreements for terms of 16 years and 17 years, respectively, Origin said.
China Petrochemical Corp., or Sinopec Group, agreed earlier this year to pay $1.1 billion to increase its stake in the Conoco and Origin development to 25 percent from 15 percent.
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