Challenges of modelling an LNG project

By Nick Crawley on February 15 2011

Recently Navigator has provided services to several LNG, petrochemical transport and storage projects in locations including Australia, PNG, Indonesia, Singapore and Iran.

Whilst working with developers, financiers, governments and other advisors, I realised that the challenge of rigorously analysing and communicating the economics and financing structures of these projects is a regular cause of frustration. In this article, I share my insights on how to smoothly analyse an integrated LNG project, whether the transaction is Greenfield, Brownfield or a re-financing.

LNG projects are, by their nature, strategic, long term assets on a mega-scale compared to typical projects. They are usually multi-billion dollar projects, with contracts for the feedstock gas ranging from 10 to 40 years. Owing to their size, LNG transactions need a large working team comprising commercial lenders, ECA houses, multi-lateral agencies and a who’s who of global engineering, law, markets, gas storage and transport experts. The scale and complexity of a typical LNG project gives us a clue as to why they often take years to reach financial close. With such huge economics, errors in their analysis can have significant consequences.

In this article, I describe how to successfully analyse and communicate the economics of an LNG project amidst the challenges of its transaction environment.

Download the PDF attachment to read the full article.

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