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Dolphin on hunt for $3bn booster



By Upstream staff 

Abu Dhabi's Dolphin Energy plans to borrow $3 billion to refinance its massive gas pipeline once the project hits full capacity early next year, the company's chief executive Ahmed al-Sayegh said today.

Dolphin expects to start pumping gas it is producing off Qatar through the pipeline to the United Arab Emirates from next month, Al-Sayegh told Dow Jones Newswires in an interview.

"We're looking to finance closer to reaching full capacity. Once the plant is operational it's cheaper to put in a very long financing plan," Al Sayegh said.

"We haven't decided on the financial instruments. All options are open," he said.

The pipeline was originally funded by a $2.45 billion conventional loan facility and $1 billion in Islamic financing, which does not usually include interest, both running for four years.

Al-Sayegh said Dolphin would again consider a combination of Islamic and conventional funding, this time over a period of 15 years or more.

At peak capacity, the 364-kilometre pipeline will pump 2 billion cubic feet of gas per day to customers in the UAE and Oman, including Abu Dhabi's and Dubai's power utilities. The gas, produced from the giant North field under a deal with Qatar Petroleum, will be processed at the Ras Lafffan onshore facility in Qatar before being piped south.

Abu Dhabi Water & Electricity and Dubai Supply Authority each have long-term contracts for 700 MMcfd of gas. The Union Water & electircity Authority of Fujairah, another UAE emirate, will receive 140 MMcfd. Oman Oil will receive 300 MMcfd from next year.

Al-Sayegh would not comment on whether a dispute with Saudi Arabia over a section of pipeline which the Kingdom claims runs through its territorial waters had been resolved.

Saudi Araia had objected to the pipeline in a letter last year to the National Bank of Abu Dhabi, which had helped arrange the original financing for the project.

However, an unnamed official told Dow Jones Saudi Arabia's objections had not been "much of a concern" for lenders as the projects owners had gauranteed the financing. The official said the lenders would have to consider all legal, technical and economic issues which might affect the pipeline when considering the project's long-term refinancing.

Al-Sayegh said the company and its partners still planned to go ahead with plans to add an extra 1.4 Bcfd of production to the pipeline, despite soaring costs which mean the expansion will now cost an estimates $4 billion, almost as much as the entire original development. He said Dolphin hoped to secure the extra production from Qatar in future.

Wednesday, 27 June, 2007, 17:58 GMT  | last updated: Thursday, 28 June, 2007, 10:16 GMT

In the swim: Dolphin Energy expects to start pumping next month
 

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