Page 6 - MEOG Week 27 2021

MEOG COMMENTARY MEOG

More progress for QP

Qatar Petroleum has reported a series of updates in recent days, including

announcing a new supply deal and raising $12.5bn via a multi-tranche bond offering.

QATAR IT has been another active few days for Qatar out for both NFE and NFS since QP announced
Petroleum (QP), which has issued multiple its final investment decision (FID) on NFE in
announcements this year relating to its North February.
WHAT: Field expansion project and other initiatives Now, the company finds itself in a stronger
QP has struck a new aimed at solidifying the company’s position as a position to finance the project following the
supply deal, raised global LNG leader. bond offering, which was QP’s first public bond
$12.5bn via a bond In recent days, the state-owned company has sale and also the largest issuance by emerging
offering and has reported on further progress. Last week, QP said markets this year. Combined orders topped
reported high interest in it had received offers for double the equity avail- $41bn, according to a document from one of the
participation in its North able to potential partners in the bidding process banks involved in the deal.
Field East project. for participation in North Field East (NFE), the “This is the largest US dollar fixed rate oil and
first stage of the expansion. Subsequently, the gas offering, the largest corporate issuance in the
WHY: company unveiled a new 10-year deal with Royal MENA [Middle East and North Africa] region,
The company is making Dutch Shell for the supply of LNG to China from and the largest corporate Formosa tranche raised
progress on North Field January 2022. And on July 1, QP followed this globally,” QP stated.
East, which is the largest with the news that it had raised $12.5bn in a mul- The company sold $1.5bn in a five-year por-
single LNG project in the ti-tranche bond offering, exceeding expectations tion at 50 basis points (bps) over US Treasuries
world. that the corporate bond offering could raise up (UST), $3.5bn in 10-year paper at 90 bps over
to $10bn. UST, $3.5bn in 20-year notes at 3.15% and $4bn
WHAT NEXT: The proceeds from the bond offering will be in 30-year Formosa bonds at 3.3%.
Proceeds from the bond used in particular to support the North Field The bonds landed roughly 10-15 bps wider
offering will be used expansion projects – with North Field South than the sovereign’s curve, which is comparable
to support the LNG (NFS) due to follow NFE – over the coming few to state-owned Saudi Aramco’s debt compared
expansion, among other years. with Saudi sovereign debt.
projects. “The most obvious comparable to QP is Ara-
Strength to strength mco, which is roughly 10-15 bps wider than the
The various pieces of news illustrate Qatar’s sovereign. But QP contributes to 80% of Qatar’s
growing dominance in the global LNG industry. budget versus 60% for Aramco’s contribution to
QP already supplies one in five LNG cargoes, and Saudi Arabia’s budget,” Arqaam Capital’s exec-
North Field East will increase its liquefaction utive fixed income director, Zeina Rizk, was
capacity from 77mn tonnes per year currently quoted by Reuters as saying.
to 110mn tpy by 2026, with the addition of NFS Now, QP stands to benefit further from
raising capacity to 126mn tpy by 2027. bringing partners into the NFE project. This is
$29bn in engineering, procurement and despite the fact that the Qatari company said pre-
construction (EPC) contracts have been handed viously that it could go it alone on the expansion.

P6 www. NEWSBASE .com Week 27 07•July•2021