Moody's Investors Service has downgraded the debt rating of Ras Laffan Liquefied Natural Gas Company to Baa3 from Baa2. The outlook on the rating is stable. The rating action concludes the review initiated on November 26, 2002, and reflects the more limited coverage of the company's new insurance policies, in particular relating to terrorism and sabotage.
The stable outlook reflects the lack of an immediate identified threat specifically against the project, notwithstanding the increased likelihood of conflict in the region. The project has a concentration of physical assets on a single site, and also has a high profile in the host country of Qatar.
On December 15, 2002 the company entered into new policies. The company now has terrorism cover for the onshore assets, covering property damage and business interruption, of only $100 million.
The book value of the onshore assets is about $1.6 billion, although the calculated estimated maximum loss is considerably smaller. The offshore assets are covered against all risks, including terrorism. Whilst the company maintains significant liquidity including a six-month debt service reserve, the combination of this liquidity plus any proceeds from insurance may not fully cover the estimated maximum loss that could arise from a terrorist attack.
Moody's also notes that the estimated maximum loss scenarios are not based on the use of weapons of mass destruction, and that the terrorism policies include standard terms that exclude cover for the use of nuclear, biological or chemical weapons. At the same time, the project has comprehensive security arrangements in place, in co-ordination with the host government which is also the majority shareholder.
The project's operational performance remains strong, with strong cashflow benefiting from the high oil price and high volumes shipped including spot sales. Ras Laffan is 66.5 percent owned by the Government of Qatar, and 26.5 percent owned by ExxonMobil, four percent by Itochu and three percent by LNG Japan. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
