More than 40 banks responded to the Qatar sponsor’s request for mandated lead arrangers (MLAs) willing to underwrite US$3.6 billion in 15 year clean project risk on the Qatar Gas II project. Twenty eight of the MLAs, which aside from Bank of Ireland, include Societe General, Standard Chartered Bank, WestLB and Bank of Scotland, are based outside the Gulf Co-operation Council region, each underwriting the project at a US$100 million hold level.
According to Adrian Olsen, head of Bank of Ireland’s project finance department, ‘as banks have become more and more familiar with the project finance sector generally, the oil and gas sector represents a significant portion of the global project finance market, so it was a natural evolution.’
And, he said this is an areas that offers significant growth potential. ‘Certainly from the bank’s perspective, that would be the case. We are being very selective because one needs an evolutionary rather than a revolutionary approach. But it is a vast sector.’
‘The global business runs into US$40 or 50 billion of financing globally every year so it’s a vast pool of potential business and so yes, it clearly is a space that is very big and we just literally dipped the tip of a very small toe in it,’ he said.
Although he would not disclose any figures, Olsen described the deal as ‘large’ and said it would be representative of the scale of project Bank of Ireland would prefer to be involved in. ‘Clearly, the oil and gas market is a very large capital intensive market so the bulk of the deals we’re doing are going to be big deals. There are a lot of smaller deals on the market but they are probably deals the bank is not interested in from a risk perspective.’
‘The larger the deal, the less risky it is because you’re dealing with the major international oil and gas players. That’s the way we would approach the sector, to certainly focus on the bigger deals where they are major projects with major multinational corporations,’ he added. Bank of Ireland has a number of similar deals in the pipeline, mainly in the USA and UK, which Olsen described as ‘safe’ markets. ‘Bearing in mind that this is very much a toe in the water approach, we are not going to go out and take over the world here, it’s much more related to exploring the safer end of the market. We have a very specific brief to work within. So clearly, the nearer these things are to home and insofar as they are in the west as opposed to the east, then we feel more comfortable with them,’ he said. |
