ExxonMobil Corp. says the multibillion-kina liquefied natural gas (LNG) project in Papua New Guinea is secured against the impacts of the current world economic crisis. It says the landmark project is pursuing a financing approach where joint venture partners can borrow their debt component as a group and not individually.
The global oil and gas giant also says it is in a "very strong" financial position to access capital markets. Its strong financial portfolio will also enable the company to take long-term capital commitments.
The PNG LNG project, worth US$10 billion (about 30bn kina), will be operated by ExxonMobil's wholly owned subsidiary, Esso Highlands.
ExxonMobil's comments follow queries whether the global financial crisis, which began in the United States, will affect the PNG LNG project and the country's economic outlook. In-country experts have said the impact of events unfolding in other economies may limit investment activity in PNG. This could impact on the LNG project, which would require debt capital and shareholders equity, including the PNG government's US$2 billion equity.
"ExxonMobil has maintained the top credit rating with Standard and Poors and Moody's for 89 years and is in a very strong financial position," the company said in a statement Wednesday. "This financial position gives ExxonMobil the opportunity to access the world's capital markets in the full range of market conditions and enables ExxonMobil to take on large, long-term capital commitments."
ExxonMobil said the PNG project was pursuing a joint financing approach that would be led by a finance committee under the company's coordination.
"The project has experienced strong interest from export credit agencies, commercial banks and rating agencies," ExxonMobil said.
Under the joint financing arrangement, project partners would borrow their debt component as a group and not individually. The smaller partners would benefit from having ExxonMobil and its significant financial capacity and ratings participating in the borrowing group.
ExxonMobil also announced that it would release its preliminary information memorandum at the end of the year with financing expected to close in the fourth quarter of next year.
The memorandum is a detailed project document which is given to a small group of serious and pre-qualified lenders to enable them to conduct detailed due diligence on the LNG project.
(C) 2008 BBC Monitoring Asia Pacific. via ProQuest Information and Learning Company; All Rights Reserved