1 / 28

EBRD investment in new gas infrastructure CEER Brussels, 9 November 2006

EBRD investment in new gas infrastructure CEER Brussels, 9 November 2006. Agenda. EBRD Environmental issues General Considerations Case studies. 2. EBRD. 3. A network of 32 offices in 27 countries Half of our bankers based in the field.

ivana
Download Presentation

EBRD investment in new gas infrastructure CEER Brussels, 9 November 2006

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. EBRD investment innew gas infrastructureCEER Brussels, 9 November 2006

  2. Agenda • EBRD • Environmental issues • General Considerations • Case studies 2

  3. EBRD 3

  4. A network of 32 offices in 27 countriesHalf of our bankers based in the field 3 new offices by end 2006: Samara, Rostov, Dnipropetrovsk

  5. Committed and growing • Regional focus: supporting investors and local companies in 27 countries of CEE and CIS • Asset base: over 1500 transactions worth €30 billion signed since 1991 • Capital base: €20 billion dedicated exclusively to this region Cumulative commitments €30.3 billion

  6. Investment challenges • Reduce transport bottlenecks and ensure competitive market access • Improve regulatory and institutional frameworks in the region • Increase private sector participation and promote direct foreign investment • Ensure high standards of business conduct, transparency, corporate governance and environmental protection

  7. A unique profile • Versatile financial instruments: providing debt, equity and guarantees • Risk appetite: extending the financial capabilities of the private sector by mitigating political risks • Legal know-how: in-depth knowledge of the region’s legal systems and experience in resolving problems. • Natural resources expertise: approx. 10% of the Bank’s portfolio is in oil, gas and mining projects.

  8. GENERAL CONSIDERATIONS

  9. What are the classic challenges in financing gas projects? (1 of 2) • Construction / Completion Risk • contractual structure (delays, cost over-runs, etc.) • Operational Risk • technological integration and experience / viability • Utilisation / Supply Risk • type of throughput arrangement • fundamentals (Market/Competition)

  10. What are the classic challenges in financing gas projects? (2 of 2) • Competition / Market • effect of oil price (linked to gas and oil products) • regional supply / demand • impact on tariff • Political & Regulatory Risks • regulatory intervention (tariffs & export volumes) • political turmoil / disputes / violence / nationalisation • discriminatory taxation

  11. EBRD facilities Guarantees Loans Equity • All risk guarantees • Specific risk guarantees(e.g. political) • Commodity-backed instruments • Trade facilitation programme • Non/partial recourse to sponsors • Project specific • Hard/local currency • Medium and long term • Floating/fixed rates • New equity • Privatisation • Quasi-equity

  12. Funding Guidelines (1 of 2) • Project Finance Criteria • 1/3 debt, 1/3 equity, 1/3 project-generated cashflow • Cashflow Ratios (DSCR, etc.) • EBRD funds up to: • 35% of total project costs for a greenfield project • 35% of long-term capitalisation of an established corporate • Maximum amounts: • Maximum is currently around € 350 million for A loans. In addition B loans can be up to twice as much. => € 1 billion • Tenor and maturity: • Project-specific (typically 10-20 year for new gas infrastructure)

  13. Funding Guidelines (2 of 2) • Pre-completion credit-enhancement: • Sponsors’ financial guarantees and other shareholder support; • Experienced Constructor; • Other risk mitigation requirements: • Experienced Operator; • Long-term gas contracts (transportation, storage and off-take) • Tariffs: Stability, Affordability and Fairness (Exemptions usually required for major new infrastructures) • Extensive EHS and social impact assessment.

  14. ENVIRONMENT

  15. EBRD environmental policy and procedures • Ensure environmental soundness of all EBRD operations • Invest in projects with specific environmental and energy efficiency benefits • Disclosure of environmental information

  16. Environmental standards for EBRD projects • Local, national, EU and World Bank standards and regulations. Similar but not equal to the equator principles, mostly due to EU standards • Where standards cannot be met initially, project will include programme for achieving compliance Environmental Action Plan

  17. CASE STUDIES

  18. Case Studies • BTC • Shah Deniz / South Caucasus Pipeline • Gastransit

  19. BTC Pipeline project

  20. BTC Project - Overview • BTC Pipeline • the primary export route for crude oil/other liquid hydrocarbons production from Azerbaijan and the Southern Caspian • 1,743 km long, with ultimate design capacity of 1,000,000 bpd • provides the additional export capacity required for ACG Field production and serves as an export route for other production from the Caspian Region • BTC Pipeline route has been selected as the optimal route for both commercial and environmental reasons • Terminal at Ceyhan on the Mediterranean coast will enable volumes to be delivered while bypassing the environmentally sensitive Turkish Straits

  21. BTC Project Cost • Total BTC Project Cost is in excess of US$3.6 billion: • Capex US$2.90bn • Oil linefill US$0.17bn • Finance costs US$0.46bn • DSRA US$0.10bn • BTC pipeline cost and Azeri Chirag Guneshli oilfield development cost combined are in excess of US$15 billion • EBRD is financing $250 million ($125 million A loan and $125 million B loan)

  22. South Caucasus Pipeline – Route (1 of 4)

  23. Shah Deniz Project – Overview (2 of 4) • Reserves: proven and probable gas-in-place of approximately 31 trillion cubic feet (tcf) – world class reserves; likelihood of an additional 22 tcf • Project: 4-stage development of the Shah Deniz gas and condensate field with Stage 1 cost of USD 2.3 billion • Local participation: State Oil Company of Azerbaijan Republic (SOCAR) also holds a 10% interest in this project (through AzSD: EBRD will part-finance their cash calls)

  24. South Caucasus Pipeline – Overview (3 of 4) • Pipeline route: a 690 km gas pipeline starting at the Sangachal Terminal, traversing Azerbaijan and Georgia and connecting with the BOTAS domestic gas distribution system at the Georgian-Turkish border • Construction & timing: SCP’s Right of Way runs parallel to BTC and construction of SCP will occur concurrently with that of BTC • Capacity & cost: a peak capacity of over 20 billion cubic feet (bcf) per annum and will cost over USD 1 billion

  25. Gastransit Phase I and II

  26. Ukraine: Balkan Gastransit Project Details: • Long term 2 Phase facility to support gas pipeline upgrade in Ukraine • Use of proceeds: construction of compressor station and parallel pipeline for total project cost of $190 million • Strong demonstration effect- only current international investment in Balkan gas pipeline project. EBRD Investment: • Phase I: $40 million EBRD 9 year senior loan and $ 12 million BSTDB parallel loan • Phase II: $51 million 12-year EBRD senior loan, $ 6 million BSTDB facility and $ 40 million commercial Bank co-financing Financing Structure: • Security based on gas export contracts • Revenues based on transportation and compression payments • Strong sponsor support (Gazprom, Naftogas Ukraine, Transbalkan)

  27. Conclusions • EBRD is keenly interested in working on new gas infrastructure • Commitment of Governments, Regulators, Suppliers and Off-takers crucial • Benefits of EBRD • EBRD involvement will help other parties on board and set international corporate and environmental standards • EBRD experience in similar projects • EBRD environmental expertise and track record • Dedication level is high due to our mandate

  28. Contact Details Enrico G. Grassi Principal Banker, Natural Resources Team Tel.   44 (0)20 7338 6179, Fax   44 (0)20 7338 6101 Email: GrassiE@ebrd.com

More Related