Moody's Investors Service has placed the A3 debt rating of Oman LNG on review for downgrade. The action is due to the increased possibility of war in the region, as well as the recent increase in global terrorist activity. Moody's also notes that there has been limited availability of terrorism insurance cover during the past year.
Whilst the rating has always taken into account the risks arising from the geographical location of the project, Moody's believes that the overall risk profile of the project has now increased.
The project currently has insurance policies in place that include some terrorism cover. As is customary, the project does not have insurance in place covering war. Oman LNG will renew its policies on January 2, 2003. Moody's will review the extent to which the new policies provide for terrorism cover in relation to the potential exposure of the project under various scenarios.
The project has a concentration of physical assets on a single site, and also has a high profile in its host country. Moody's notes that the project has comprehensive security arrangements in place, in co-ordination with the host Government which is also the majority shareholder. The project also maintains liquidity through reserve accounts to help deal with unexpected events.
Moody's notes that the project is performing well, with strong cashflow due to the high oil price and high volumes shipped including spot sales. Oman LNG is 51 percent owned by the Government of Oman, and 30 percent owned by Shell. In 2001 it reported revenues of $1.18 billion. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
