financing lng projects and infrastructure member of mufg, a global financial group the bank of...
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A member of MUFG, a global financial group
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Financing LNG Projects and
Infrastructure
SEPTEMBER 2016
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Bank of Tokyo-Mitsubishi UFJ
BTMU in Indonesia
• BTMU is the only Japanese bank operating a branch in Indonesia
• BTMU is one of the largest foreign bank operating in Indonesia by loans outstanding
• In 1957 the former Bank of Tokyo opened a representative office in Jakarta that began full-service operations in 1968
Mitsubishi UFJ Financial Group (MUFG) is one of the world’s leading financial groups. MUFG aimsto “be the world’s most trusted financial group”
Bank of Tokyo-Mitsubishi UFJ (BTMU) is the commercial bank unit of MUFG.
BTMU is Japan's largest and one of the world's largest commercial banks, with offices throughoutJapan and in 40 other countries, providing professional financial solutions to our valuedcustomers.
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Investment Banking Division for the Americas, New York & Los Angeles
Investment Banking Division for Europe, Middle
East and Africa, London Structured Finance Division,Financial Solutions Division,
Syndication & Product Planning Division, Tokyo
Australian Structured Finance Office,
Sydney & Melbourne
Asian Investment Banking Division, Singapore &
Hong Kong
• Asian Investment Banking Division (AIBD) is headquartered in Singapore and Hong Kong
• Our Investment Banking Divisions provide professional investment banking solutions to our clients across the globe.
BTMU Investment Banking Division Global Network
BTMU - Asian Investment Banking Division
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BTMU as Project Finance Market Leader
Global Initial MLA League Table (2015 Full Year)
Rank Mandated lead arrangers US $ MM Share Deals
1 MUFG 16,127 5.8 143
2 SMBC 12,832 4.6 108
3 Bank of Taiwan 12,053 4.3 1
4 State Bank of India 10,855 3.9 30
5 Mizuho 8,730 3.1 79
6 Credit Agricole 8,286 3.0 90
7 ING 7,852 2.8 89
8 Santander 6,879 2.5 91
9 BNP Paribas 6,683 2.4 76
10 Societe Generale 6,568 2.4 70
Asia Pacific Initial MLA League Table (2015 Full Year)Rank Mandated lead arrangers US $ MM Share Deals
1 Bank of Taiwan 12,053 15.8 1
2 State Bank of India 10,855 14.2 30
3 MUFG 5,386 7.1 38
4 KDB 4,422 5.8 12
5 SMBC 3,667 4.8 25
6 Mizuho 2,696 3.5 23
7 Commonwealth Bankof Australia 2,630 3.5 22
8 Westpac 2,540 3.3 23
9 ANZ 2,513 3.3 21
10 National Australia Bank 1,995 2.6 26
(Source) Project Finance International (PFI)
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Our Expertise Proven by Industry Awards
(Source) Project Finance International (PFI), Global Finance, Euromoney, IJGlobal
Asia-Pacific’s Deal of the Year
Ichthys LNG Pty Ltd.AustraliaUSD16bn
Bookrunner and Mandated Lead Arranger
Asia-Pacific’s Oil & Gas Deal of the Year
Australia Pacific LNG Australia
USD8.5Billion
Mandated Lead Arranger
Americas’ Bond Deal of the Year
FPSO Cidade de AnchietaBrazil
USD 500m
Latin America Upstream Oil & Gas Deal of the Year
Rating Adviser andPlacement Agent
Nghi Son RefineryVietnam
USD 5,000m
Asia-Pacific Petrochemicals Deal of the Year
Financial Advisor, MLA, DD/Modelling Bank,
Offshore Account Bank, JBIC agent
Asia Pacific Oil & Gas
Deal of the Year
Donggi-Senoro LNGIndonesia
USD 1,527m
ECA Coordinator, Mandated Lead Arranger,
Security Agent, Account Bank
2014
Asia-Pacific Bank of the Year
2013
Global Bank of the Year
2012
Global Arranger
2012
Latin America Arranger
2012
North America Financial Adviser
2015
Global Bank of the Year
Global Project Finance Bank of The Year 2015 and 2013 / Asia-Pacific Project Finance Bank of The Year 2015
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BTMU Indonesia Track Record
Banten Power
Mandated Lead Arranger
2013
Indonesia
USD 998 million
PT. Smelting
Mandated Lead ArrangerOnshore Account Bank
2011
Indonesia
USD 300 million
Paiton 3
Onshore Account Bank, Onshore Security Agent
2010
Indonesia
USD 1,215 million
Cirebon Power
Mandated Lead Arranger
2010
Indonesia
USD 850 million
Tanjung Jati B
Mandated Lead Arranger
2008
Indonesia
USD 2,200 million
Central Java
Mandated Lead Arranger
2016
Indonesia
USD 4,000 million
Lampung FSRU
AdvisorMandated Lead Arranger
2013
Indonesia
USD400 million
Sarulla Geothermal
Onshore Account Bank
2014
Indonesia
USD 1,600 million
Balongan Refinery Expansion
Mandated Lead Arranger
2008
Indonesia
USD 225 million
Donggi-Senoro LNG
Mandated Lead Arranger
2014
Indonesia
USD 2,866 million
Tangguh LNG Train 3
Mandated Lead Arranger
2016
Indonesia
USD 3,750 million
West Java FSRU
Mandated Lead Arranger
2013
Indonesia
USD 252 million
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Rationale for LNG
• West Java and Central/South Sumatra represents the largest natural gas demand centers,however local supply is unable to match demand.
(Source) Wood Mackenzie
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Rationale for LNG
• Natural gas demand in Indonesia is projected to grow at a CAGR of 4.1% between 2017 and2025 and exceed the domestic production.
• LNG infrastructure is needed for import of LNG
(Source) Investment Opportunity in East Java ProvinceSource: Business Monitor International
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The entire natural gas/LNG value chain must be commercially viable and bankable.
Key Issue : Risks along the LNG Value Chain
Upstream Gas Production
Gas Liquefaction
LNG Transportation
LNG Regasification
Gas Pipeline Distribution
End User / Power Plant
• LNG Infrastructure is a means to bring natural gas to End Users such as Power Plants.
• LNG infrastructure includes LNG Transportation and LNG Regasification.
• LNG infrastructure is developed and operated within the natural gas value chain.
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The entire natural gas/LNG value chain must be commercially viable and bankable.
Key Issue : Risks Along the LNG Value Chain
Upstream Gas Production
Gas Liquefaction
LNG Transportation
LNG Regasification
Gas Pipeline Distribution
End User / Power Plant
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Most of the capital cost of the LNG Infrastructure is USD denominated
Key Issue : Currency Mismatch
• Bank Indonesia Regulation No. 17 (No. 17/3/PBI/2015) requires the mandatory use of Rupiah for transactions conducted in Indonesia, whereas most of the capital cost is incurred in USD.
Source: Yahoo! Finance
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Most of the capital cost of the LNG Infrastructure is USD denominated
Key Issue : Offshore Borrowing Regulations
• Bank Indonesia Regulation No. 16 (PBI no 16/21/PBI/2014) and Circular Letter No. 16/24/DEKM implements prudent principles in the management of offshore borrowings by local companies, requiring
• Hedging of at least 20% of open foreign currency exposures that fall due within the next 3 to 6 months
• Maintenance of a minimum 50% Liquidity Ratio, where current assets are equal to 50% of current liabilities due
• External credit ratings from a rating agency recognised by Bank Indonesia, of at least “BB-” (applicable from 1 Jan 2016).
• The hedging and external credit ratings requirements would create additional costs to LNG Infrastructure projects.
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Case Study : Guangdong LNG Terminal 2004
• In October 1998, a Guangdong LNG Terminal project was given the initial go-ahead by the Chinese government. The project was comprised of a 3.3m tpa LNG import terminal and a 213km pipeline in Chentoujiao, Shenzhen, Guangdong Province.
• Estimated project cost was USD600m.
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Power Plant(Offtake 3)Power Plant
(Offtake 3)Power Plant(Offtake 3)Power Plants
Case Study : Guangdong LNG Terminal 2004
Guangdong DapengLNG Company Ltd
CNOOCGuangdong
Province consortium
TowngasHK ElectricBritish Petroleum
New Built LNG Vessel SPV
STTS Group(LNG Terminal EPC
Contractor)ShipyardChina Petroleum
Pipeline Engineering(Pipeline EPC Contractor)
North West Shelf Venture
(LNG Supply)
Power Plant(Offtake 1)Power Plant
(Offtake 2)Power Plants(Under Construction)
Time Charter Agreement
Pipeline EPCTerminalEPC
Ship BuildingContract
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Case Study : Guangdong LNG Terminal 2004
Financing Issues
• Regulatory Issues
• Demand Risk
• Construction Risk
• Project-on-Project Risk
• Offtaker Credit Risk
• Cashflow Risk
The first non-recourse deal in China financed purely by Chinese banks for more than RMB 5 billion was signed on April 30, 2004 .
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This presentation material is provided to our customers and the potential partners on a private and confidential basis. The Bank Of Tokyo Mitsubishi UFJ, Ltd. (“BTMU”) retains copyright to this Document and no part of this Document may be reproduced in whole or in part, nor may any of its contents be divulged to third parties, without prior written consent of BTMU. BTMU has based this document on information available to the public from sources BTMU believes to be reliable. BTMU and its subsidiaries and affiliates accept no liability whatsoever to any third parties resulting from any unauthorised distribution. BTMU and its subsidiaries, affiliates, directors and employees accept no liability whatsoever for any reliance on the information contained in the Document and make no representation or warranty as to its accuracy and completeness. BTMU accepts no responsibility for errors of fact or for any opinion expressed in this document. The views contained in this Document (including any statements and forecasts) are solely those of BTMU and are subject to change without notice. BTMU is under no obligation to correct any inaccuracies in the Document or update the information contained therein or to notify recipients of this Document of any such change. Recipients must make their own independent judgment with respect to any matter contained in this document. Neither BTMU nor any of its subsidiaries, affiliates, directors and employees will be responsible for any losses or damages which any person may suffer or incur as a result of relying upon anything stated or omitted from this DocumentNothing in this presentation material shall constitute any commitment by BTMU to provide a service, a facility and/or financing. Any such agreement to provide a service, a facility and/or financing would be subject to (but not limited to) the necessary credit approvals, internal approvals and execution of a legally binding agreement (the “Agreement”). In the event of any inconsistency or any conflict between the provisions or information contained herein and the Agreement, the Agreement shall prevail.
Neither this presentation material nor any other communication prepared by BTMU is or should be construed as investment advice, a recommendation to enter into a particular transaction or pursue a particular strategy, or any statement as to the likelihood that a particular transaction or strategy will be effective in the light of your business objectives or operations. Any decision to enter into a transaction will be yours alone, not based on nor in reliance on any information prepared or provided by BTMU. BTMU hereby disclaims any responsibility to you concerning the characterisation or identification of terms, conditions, and legal or financial or accounting or tax or other issues or risks that may arise in connection with any particular transaction or business strategy. You should obtain separate independent professional, legal, financial, tax or other advice, as appropriate.
Copyright 2016 The Bank of Tokyo-Mitsubishi UFJ, Ltd. All rights reserved.
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