The Nigeria Liquefied Natural Gas Train 7 project has reached final investment decision and is scheduled for commissioning in 2025, but a record number of lenders in different continents are providing financing, which says a lot about the dire times the global economy is facing.
Lagos-based Templars law firm advised an assortment of 31 lenders on the $3 billion multi-tranche corporate financing provided to NLNG Limited for the development of its Train 7 Expansion Project.
According to details provided by the law firm, the lenders include three export credit agencies – Export-Import Bank of Korea (KEXIM), Korea Trade Insurance Corporation (K-SURE) and Servizi Assicurativi del Commercio Estero (SACE).
Others are two regional development finance institutions: African Export-Import Bank and Africa Finance Corporation; 16 international commercial banks under an international commercial facility tranche; and 10 Nigerian commercial banks, under a Nigerian commercial facility tranche.
The financing, which is supported by substantial cashflows from NLNG’s existing six-train LNG plant, is record-setting for being the first time ever that a multi-sourced corporate finance lending would be utilised to fund an LNG project anywhere in the world.
Financing for the project has been a major challenge, especially with the world in throes of a deadly pandemic that has sickened over 4 million people and killed over 300,000 people.
Before proceeding, one of the major shareholders of the NLNG, Shell, extracted a formal commitment that all the partners in the project would raise financing to fulfil their obligations.
Shell, in a note to its shareholders, said the new LNG processing unit would be funded by NLNG without shareholder loans or shareholder equity requirements. The project cost is therefore not reported as part of Shell’s overall capital expenditure. This made it important to include a consortium of lenders across different continents.
The project is projected to cost $5.7 billion and will include a new liquefaction unit, an 84,200m³ storage tank, a 36,000m³ condensate tank and three gas turbine generators.
“It is expected to increase NLNG’s production capacity from 22 to 30 million tonnes per annum, thereby placing the company among the top five producers and exporters of LNG in the world,” said Templars law firm in a release.
The consortium also comprises leading engineering contractors, Saipem, Chiyoda and Daewoo, who have been appointed EPC contractors with responsibility for detailed design, engineering and construction works on the project.
“We are pleased to have played a role in creating this first-of-its-kind financing technique, which happens to be the largest financing on the continent so far in 2020. It continues a trend of Templars advising on a majority of the largest and most complex infrastructure projects in the Nigerian market, be it in the area of gas, pipelines, power, roads, ports, telecom infrastructure or petrochemicals,” said Oghogho Akpata, managing partner at Templars.
Chike Obianwu, partner and finance practice group head, said, “Quite apart from its size and the uniqueness of the hybrid corporate finance technique being used on a deal of this nature, this was a standout deal for a number of other reasons…. And it is quite remarkable that the parties were able to pull this off in the middle of the COVD-19 pandemic and a particularly trying period for the Nigerian economy …. It has been a pleasure to have contributed to the success of the transaction and we wish NLNG all the best with the development of the project.”
The Templars team on the transaction was supported by a large team of lawyers from the London, Milan and Seoul offices of White & Case led by the London-based partners, Jason Kerr, David Baker and Richard Hill who acted as international counsel to the lenders, the company said.
