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Thu 14 Feb 2008 10:37 AM

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Funds sought for Yemen's first big project financing

Total leads group selecting banks to finance country's LNG project.

A Total-led group is selecting arranging banks to finance Yemen's liquefied natural gas (LNG) project, the country's first big project financing, banking sources told Reuters Loan Pricing Corp.

Total, the French oil company, is the main sponsor for the liquefaction plant in the port of Balhaf on the southern coast of Yemen. It will be able to produce 6.7 million tonnes per year of LNG, which is gas chilled to liquid for ease of transport.

The lack of a precedent makes pricing and structuring the debt more difficult, a banker said.

The Yemen LNG deal aims to raise about $3 billion in debt, although the financing structure has not been finalised. Bankers expect the project to pick the arranging lenders soon to lead a commercial syndicated loan of $800 million to $1 billion.

The remaining funds will come from Total, which will provide around $1 billion, and from export credit agencies Export-Import Bank of Korea (KEXIM), France's Coface, Japan's Nippon Export and Investment Insurance (Nexi) and Japan Bank for International Co-operation.

Total is the main shareholder in Yemen LNG with 39.6%, while US Hunt Oil holds 17.2%. (Reuters)

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