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ING Natural Resources Advisory
Financing Major Oil and Gas Projects in
Uganda
6th May 2014
UK-Uganda Business Forum
Lancaster House, London
Rodolphe Olard
Global Head of Natural Resources Advisory
ING and Natural Resources
May 2014
1
ING Group key figures 2013
€ 1,080bn
Total assets (31 Dec 2013)
Shareholders’ equity (31 Dec 2013)
€ 46bn
ING Bank Core Tier 1 ratio (31 Dec 2013)
11.7%
Ratings (as of 24 Jan 2014)
S&P
Moody's
Fitch
Group
A-
A3
A
Bank
A
A2
A+
AA+
AAA
AAA
4Q 2013
FY 2012
FY 2013
Group
€ 467m
€ 3,756m
€ 4,400m
Bank
€ 904m
€ 3,554m
€ 4,323m
The Netherlands (country credit rating)
Results (underlying result before tax)
May 2014
2
ING and Natural Resources
- ING is a market leading bank with unparalleled recent experience in lending to and advising on
complex project finance transactions;
- ING has a long-standing experience in Africa, having financed many long term natural resources
projects;
- ING advisory team is a leader in emerging markets, demonstrated by our role as financial advisor on the
largest emerging market deal of 2012, the Surgil upstream/downstream project financing in Uzbekistan;
- ING has extensive experience advising joint ventures between Government Agencies, National Oil
Companies, International Oil Companies and International NOCs; and
- We have excellent relationships with all major Export Credit Agencies (“ECAs”), development banks and
multilateral agencies.
• Our strategy is to be the partner of choice for natural resources project financing transactions in
Uganda and the wider East African Community.
May 2014
3
ING Natural Resources in Africa
•
Strong track record in Africa,
including:
-
-
•
USD 1.41 bln financing for
Bonny Gas Transport in Nigeria
in 2013 (further to the
participations in the previous
financings in 2002 and 2006)
USD 2.1 bln Ambatovy Nickel
project in Madagascar in 2007,
East Africa’s largest project
financing in the natural
resources sector so far
ING’s Track Record in Africa
Chad / Cameroon
• Chad-Cameroon pipeline
• Skikda LNG
- Sonatrach
- MOL
- Itochu
Ghana
• Tullow Oil
• Kosmos
• SBM
- Aseng FPSO
- Serpentina FPSO
•
•
•
•
ExxonMobil / NNPC Satelite
ExxonMobil / NNPC NGL II
Falcon FPSO/SBM
Nigeria LNG/
Shell/Total/ENI/NNPC
• Bonny Gas Transport/
Shell/Total/ENI/NNPC
• Addax Petroleum
Angola
•
•
•
•
Cameroon
• Shell
Gabon
• Total
• Perenco
• Tullow Oil
May 2014
• E-Methanex
- Methanex
- EGPC
• SEGAS LNG
- BG
- Union Fenosa Gas
- EGPC
• Egyptian LNG 1&2
- BG
- Petronas
- EGPC / EGAS
Equatorial Guinea
Nigeria
Led transactions in Africa
involving international and
national clients such as
ExxonMobil, Total, Tullow Oil,
Kosmos, Perenco, SBM,
Sonatrach, NNRC, Sonangol and
Sinopec
Egypt
Algeria
Mozambique
• Mozal Aluminium Smelter
Sinopec
Sonangol
BP
FPSOs:
- Xi Komba
- Kuito
- Sanha
- Mondo
Madagascar
•
• Ambatovy Minerals
4
ING’s advisory team has unparalleled
experience in the oil and gas sector
Selected current mandates
• Joint Financial Advisor to South Stream Transport BV on the EUR 10 bln debt financing of the
63bcm offshore gas pipeline from Russian Black Sea shore to the Bulgarian
• Joint Financial Advisor to South Stream Hungary on the Hungarian section of the South Stream
Pipeline
• Co-Financial Advisor to Uzbekistan GTL on a USD 3.5 bln financing of a gas-to-liquids project in
Uzbekistan (shareholders are Uzbekneftegaz, Sasol of South Africa and Petronas)
• Financial Advisor for the USD 9 bln Pengerang Energy Complex in Malaysia
• Financial Advisor to Nizhnekamskneftekhim on the structuring and financing of a USD 3 bln
petrochemical expansion project in Tatarstan
• Financial Advisor to Shtandart TT B.V. on the USD 1 bln Oil Tank Terminal Europoort West project
in the Port of Rotterdam
Selection of recently completed mandates
• Financial Advisor to CNPC on the financing of the USD 8 bln Line C of the Central Asia Gas
Pipeline and Beineu-Shymkent Gas Pipeline from the Turkmen border to China
• Award winning Financial Advisor to Uz-Kor Gas Chemical for the financing of a USD 4 bln integrated
upstream gas / petrochemical project in Uzbekistan, the first of its kind in the CIS region
• Financial Advisor to KazMunaiGaz on the Kazakhstan Caspian Transportation System (consisting of
an oil pipeline from Kashagan and maritime link across the Caspian Sea)
• Award winning Financial Advisor to a joint venture company developing the USD 2.4 bln Jurong
Aromatics integrated condensate splitter and aromatics project in Singapore
• Financial Advisor to Akenerji on a 900MW Egemer gas-fired power plant in Turkey (closed in 2011)
• Financial Advisor to EDF on Dunkerque LNG import terminal until FID / start of EPC
May 2014
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The advisory team is recognized in project
finance trade press and global conferences
IJ Online Awards 2013
“Surgil project financing wins Global Oil and Gas Deal of the Year 2013
Award from Infrastructure Journal Online”
PFI Mid-Year Review 2013
“The Europe, Middle East and Africa (EMEA) loans table showed a decent
16.9% upturn in activity to US$46bn but all of the growth can be accounted for
by a truly one-off deal – the US$7.7bn Uzbekistan/Kazakhstan to China gas
pipeline scheme funded by China Development Bank (CDB). The deal was
arranged on a non-recourse basis, with ING advising, and is therefore
included in the league tables.”
PFI European Bank of the Year 2012 – ING
“ING was not just a shrewd funder in 2012. Its London based natural resources
advisory team proved to be one of the best in the business with their work
on the US$2.54bn Uz-Kor petrochemical financing in Uzbekistan.”
May 2014
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Considerations for Financing Major Oil
and Gas Projects in Uganda
May 2014
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Considerations for the successful project
financing of major oil and gas projects in
Uganda
•
Robust Legal
Framework
May 2014
Establishes equitable terms for state/local and foreign participation
•
Protects all shareholders and aligns their interests to the benefit of the project and the country
If a cross border project, an Intergovernmental framework agreement(s) will need to be added.
•
Lenders to likely require key Project and Financing documents to be under English or New York law
•
Delays in constructing necessary local and regional infrastructure to support a project can lead to completion delays and “bottlenecking” of
current capacity.
•
Environmental
and social
footprint
•
•
Supporting
Infrastructure
Construction,
commissioning
and completion
of project
A suitable shareholder legal framework will need to be established
•
New roads and railway infrastructure for construction traffic and, if appropriate, product offtake
•
Power supply (uninterrupted) during construction and operation phases
•
Water supply and treatment
•
Workers construction camps and operation phase staff accommodation
•
“Competition” for infrastructure from other projects
Supporting infrastructure is often not part of project costs and therefore is for third parties to develop
•
Suitable construction arrangements will need to be put in place, usually via EPC contracting arrangements with a sector and geographical track
record.
•
Contractor(s) to typically take main construction risk.
•
However, for large scale projects in new markets, lenders will typically require a form of shareholder support to cover risks of delay or overruns
during the construction period: debt service undertaking or a full completion guarantee
•
Associated project completion risk
•
Large projects will by definition leave an environmental and social footprint
•
Lenders will be keen to ensure that national and international environmental and social guidelines are followed; international banks will require
Equator Principles compliance
•
Individual Export Credit Agency and Multilateral Agency requirements
•
Will require validation from commercial and ECA/multilateral lender’s consultants
8
Considerations for the successful project
financing of major oil and gas projects in
Uganda (cont.)
•
Supply off
feedstock and
viability of
offtake market
Permitting /
regulatory
arrangements
Operating and
maintenance
arrangements
•
upstream reserves / supply
•
downstream product offtake and marketing arrangements
•
Viability will need to be confirmed by the Lender’s Technical and Marketing consultants
•
A robust framework for the streamlined granting of consents, permits and licenses necessary for the construction and operation of the
project.
•
Equipment imports
•
National and local permitting
•
Satisfactory arrangements will need to be in place via dedicated personnel or an O&M contract with a recognised entity.
•
Suitability to be confirmed by Lenders’ Technical Consultant;
•
In multi-facet projects, the interfaces between operation of different parts of projects will be carefully scrutinised by lenders
•
Multilateral Agencies. Can also finance early stage development
•
Large scale projects involving foreign sponsors/contractors can benefit from Export Credit Agency involvement
Financing Plan
•
May 2014
Lenders will conduct in depth due diligence and will look at:
•
Direct lending
•
Insurance cover to benefit commercial banks
Level of eligible content (equipment and services) needs to be considered in light of potential ECA involvement
9
Case Study: Uz-Kor/Surgil Project,
Uzbekistan
Surgil – a Landmark Project in a double
land-locked Category 6 Country
Working with Government / Sponsors / JV on a robust, bankable Investment Agreement
• In Uzbekistan, ING was the sole financial adviser on the ground-breaking USD 2.54 billion Surgil project financing; project sponsors were
Uzbekneftegaz, the national oil and gas company of Uzbekistan, and a Korean consortium comprising Korea Gas Corporation, Lotte Chemical
and STX Energy
• The first oil and gas project financing in the country and the largest downstream project financing in the CIS region to date.
• During the initial stages of our mandate, we were involved in the negotiation of a robust Investment Agreement (“IA”), signed in 2010 between
the Government of Uzbekistan, project company and all project sponsors; a supplemental investment agreement was signed in 2011
• The goal of the IA was to ensure the protection of Government and sponsors’ interests and bankability from an international lender perspective;
it ensures stabilisation of certain legal, regulatory and fiscal regimes for the duration of the project
• ING was able to act as sounding board for various ideas of the Sponsors and Government of Uzbekistan
• Thanks to the success of the Surgil Project financing and at the request of the Government of Uzbekistan, ING was appointed as co-financial
adviser on the c. US$ 5bn Oltin Yo’l Project, a joint venture between Uzbekneftegaz, Sasol and Petronas. The legal framework is similarly
based on a robust investment agreement
• Since the project is intended to supply refined products to the domestic market, part of the financial advisers’ role has been to develop a
detailed market due diligence to ensure the acceptability of local offtake arrangements for potential lenders.
Global Oil and
Gas Deal of the
Year 2013 award
May 2014
11
Surgil Project: Global Oil and Gas Deal of
the Year 2013
•
Thanks to its landmark nature, the Surgil project financing has now been awarded the prestigious European Petrochemicals Deal of the Year Award 2012 by both
PFI/Thomson/Reuters and Project Finance Magazine/Euromoney, further confirming ING’s leading position in the oil and gas processing/petrochemicals advisory sector.
The transaction has won a number of other awards from various publications
•
The deal has also recently been awarded 2013 Oil and Gas Deal of the Year by Infrastructure Journal online
Infrastructure
Journal Online
Project Finance
International /
Thomson /
Reuters
Project Finance
Magazine /
Euromoney
Global Oil and
Gas Deal of the
Year
European
Petrochemicals
Deal of the Year
European
Petrochemicals
Deal of the Year
2013
2012
2012
May 2014
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Surgil – a Landmark Project in a double
land-locked Category 6 Country
Working with Government / Sponsors / JV on a robust, bankable Investment Agreement
• In Uzbekistan, ING was the sole financial adviser on the ground-breaking USD 2.54 billion Surgil project
financing; project sponsors were Uzbekneftegaz, the national oil and gas company of Uzbekistan, and a
Korean consortium comprising Korea Gas Corporation, Lotte Chemical and STX Energy:

The first international oil and gas project financing in Uzbekistan;

The largest project financing to-date in Central Asia;

The largest petrochemical project financing to-date in the Former Soviet Union;

One of the largest integrated upstream and downstream oil and gas project financings;

The largest South Korean Export Credit Agency supported financing ever raised for an
international project;

The first time the Asian Development Bank, South Korean, Chinese, Uzbek and European
lenders share the same financing documentation;

The first Equator Principles-compliant project in Uzbekistan;
Global Oil and
Gas Deal of the
Year 2013 award
May 2014
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What are the Benefits for Uganda of
raising project finance?
Benefits for Uganda
• The benefits for Uganda of implementing project finance structures for major oil and gas projects include
May 2014

Working in partnership with project sponsors, the further implementation by the Government
of the National Oil and Gas Policy of 2008 through accessing large pools of international
liquidity in order to fund major infrastructure projects;

Will advance further development of the Lake Albert Rift Basin oil and gas fields;

The supply and export of refined products to support economic growth and develop and
diversify the country’s industrial base;

The ability to export and monetise crude oil to improve the country’s balance of payments;

The further development of associated gas power infrastructure;

Expand knowledge base and increase exposure to technology driven projects;

Socio-economic benefits including local and regional infrastructure development,
development of local businesses, training of the local workforce and the creation of
thousands of jobs; and

The successful implementation of project finance for large infrastructure projects in Uganda
can enhance the country’s image as an investment destination of choice.
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Conclusion
•
The discoveries in the Lake Albert Rift Basin present an opportunity for Uganda to develop its natural
resources infrastructure in line with the National Oil and Gas Policy 2008;
•
International liquidity can be accessed under well-structured project finance lending;
•
International lenders (commercial and ECAs) have appetite for emerging market project finance;
•
Uganda can benefit:
May 2014
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Develop a domestic petrochemical industry that can be a centre for regional production and
distribution
-
Monetise residual reserves
-
Create associated infrastructure, new skills and jobs
-
Build new relationships with international lenders
16
Thank you
Rodolphe Olard
Paul Mandeville
Anne Rodriguez
Managing Director
Director
Senior Vice President
Global Head of Natural Resources Advisory
Natural Resources Advisory
Natural Resources Advisory
Natural Resources Advisory
ING Commercial Banking
ING Commercial Banking
ING Commercial Banking
T: +44 20 7767 5784 M: +44 7815 504 514
T: +44 20 7767 6672 M: +44 7833 437 332
T: +44 20 7767 1313 M: +44 782 5351 585
E: paul.mandeville@uk.ing.com
E: anne.rodriguez@uk.ing.com
E: rodolphe.olard@uk.ing.com
May 2014
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Disclaimer
This presentation has been prepared by the natural resources advisory team (“ING Natural Resources Advisory”) of ING Bank
N.V., London branch (“ING”). All reasonable care has been taken to ensure that the facts stated, assumptions, market data and
other information given in this proposal are fair and reasonable as at the date of publication of this presentation however, ING
has not independently verified the information given in this presentation. Accordingly, no representation or warranty, express or
implied, is made as to the fairness, accuracy, completeness or correctness of the information and assumptions contained in this
presentation. The information and assumptions in this document are subject to change without notice. Neither ING nor any of its
affiliates, officers or employees accepts any duty of care to the recipient or any liability for any direct or consequential loss arising
from any use of this presentation or its contents.
Any projections or assumptions contained in this presentation are provisional only and ING reserves the right to amend or
change such projections or assumptions to the extent additional or amended material information comes to its knowledge. In
addition, any conclusions contained herein are subject to change, depending on the market conditions prevailing at the time.
The presentation and the information contained herein are confidential.
Copyright and database rights protection exists in this document and it may not be altered, reproduced, disclosed, sold or
distributed by any person for any purpose without the prior express consent of ING. All rights are reserved.
A reference to ING Natural Resources Advisory is to the natural resources project advisory team of ING Bank N.V. and certain of
its subsidiary companies. ING Bank N.V. is incorporated with limited liability in the Netherlands and is authorised by the Dutch
Central Bank. ING Bank N.V., London branch is registered in England (Registration number BR000341).
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