Qatar Gas Transportation Co (Nakilat) is considering tapping the Islamic finance market as part of plans to raise $2.5 billon early next year to pay for tankers, the company's managing director said.
The world's largest shipper of liquefied natural gas, which is gas chilled to its liquid state to make transportation easier, has ordered 54 tankers to cope with growing global demand and could invest up $1 billion in its own shipyard.
Nakilat considered borrowing in accordance with Islamic law when it raised $4.3 billion in December but decided instead to use a mix of conventional bonds, loans and export credits.
"We approached banks last time for Islamic financing, but we couldn't get a good deal probably because of the long-term tenor. The banks now say they have some mechanisms for us," Managing Director Muhammad Ghannam told Reuters in an interview.
The company sold $1.15 billion of bonds maturing in 2033 to help pay for 16 tankers built by South Korea's Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industries Co and Hyundai Heavy Industries Co, the world's biggest shipbuilder. Nakilat needs $2.5 billion to pay for another nine tankers and if it exercises an option to buy two more, it would look to raise $3 billion by the end of the first quarter, Ghannam said.
Sales of Islamic bonds, or sukuk, are surging on growing demand among the world's 1.2 billion Muslims for investments that comply with their beliefs, making it easier for companies to borrow larger amounts at longer maturities.
Deutsche Bank expects sukuk sales to reach $50 billion this year, almost five times the estimated total for 2006. Sukuk comply with Islam's ban on lending on interest and the trading of debt, and are backed by physical assets.
Nakilat is borrowing 90 percent of the cost of the 25 tankers it will wholly own. The remaining 29 ships, ranging in capacity from 145,000 cubic metres to 216,000 cubic metres, will be owned with partners, Ghannam said.
All the ships will be delivered by February 2010. By then Nakilat will have completed a shipyard at the Ras Laffan port in Qatar, holder of the world's third-largest natural gas reserves.
Nakilat signed a deal with in March with KS Investments, a subsidiary of Singapore's Keppel Corp, to build and operate a yard to repair LNG carriers and convert tankers into vessels used for deepwater oil production and storage.
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