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The Barzan gas project topped the rankings of the largest project financing deals in 2011

The Barzan Gas Project was the world’s largest project financing deal completed in 2011, with a value of US$9.8bn, according to Dealogic, a company that provides support and information systems and services to the financial sector. Dealogic produces quarterly and annual reports and rankings on project finance.

The Barzan project reached financial close in December 2011. According to QNB Capital, it involves onshore and offshore gas processing facilities, which will produce 1.4bn cubic feet of sales gas per day when completed in 2015. The gas will be used to supply Qatar’s growing domestic energy demand.

 

Top Ten Global Project Finance Deals in 2011 (US$bn)

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Globally, the total value of projects was US$405bn, a 13.2% increase on 2010. The increase in the value of projects was driven by strong growth in the energy sector, particularly the power sector, which grew by 23% on 2010 to US$89.4bn.

India topped the Dealogic rankings with US$87.7bn of project finance deals in 2011. According to QNB Capital, over half of these projects were in the energy sector as India is on a drive to increase power generation to meet strong domestic energy demand. A great deal of investment is also going into the development of infrastructure in India. The largest project financing deals in the country in 2011 were for the Vedanta Aluminium Refinery Refinancing (US$4.7bn) and the Hyderabad Metro Rail Project (US$3.6bn).

Australia ranked second with US$36.8bn of projects in 2011, boosted by deals to finance two coal export terminals worth US$6.6bn. The US ranked third with US$33.5bn of projects.

 

Top 15 Countries for Project Finance in 2011
(US$bn, % of global total in brackets)

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The Barzan project alone has pushed Qatar up the global rankings for project financing to 12th place, just behind China and Saudi Arabia but ahead of Turkey and Singapore. The Barzan project accounted for 2.4% of total global project financing deals in 2011.

Project financing deals need to meet strictly defined criteria to be included in the Dealogic rankings. Deals must be clearly defined social and economic infrastructure projects, which involve long-term assets, dependency on cash flows and commercial bank lending. They include Public Private Partnerships (PPP) and Private Finance Initiatives (PFI), which are methods of funding of public initiatives with private capital. Qatar appeared in Dealogic’s top fifteen countries for project financing in 2008 and 2009 but dropped out of the rankings in 2010. In 2008, four projects worth US$6.7bn reached financial close and in 2009 this rose to six projects worth US$9.2bn.

Based on data from MEED projects, a high value of projects are expected to be awarded in 2012-13. These include the Qatar integrated rail project, a light rail system in Doha that will interconnect with other rail projects, with an estimated contract value of over US$20bn; a US$6bn contract for the civil works for the metro system in Doha; US$3.5bn for part of the Lusail development to the north of Doha; a US$3bn expansion of the integrated water and power plant at Ras Lafan; and US$3bn for phases three and four of the Musheireb project, a mixed-purpose development in the centre of Doha.

The number and value of projects at the bidding, design, planning and study stage implies that the level of awarded projects should soon surpass their pre-financial crisis levels, according to QNB Capital. In the context of this strong project pipeline, it is likely that substantial amounts of project financing will be required, and so Qatar will continue to rank highly in the Dealogic index in the coming years.


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