Japanese banks lend most money to LNG projects

Japanese banks have been investing heavily in LNG projects, lending more than $US5 billion in 2014.

A new report out by energy and shipment advisor Poten and Partners shows Japanese banks provided 43 per cent out of the total $US12 billion provided to LNG projects by banks worldwide.

The top three Japanese banks to each lend more than $US1 billion were Bank of Tokyo Mitsubishi, Mizuho and Sumitomo Mitsui Banking Corp.

European banks came in second, lending more than $US4.8bn last year.

While Non-Japanese Asian banks, which included lenders from Australia, Singapore, South Korea and China, lent $US880 million.

Despite the US hosting the two biggest project financings of 2014, only $780 million came from US lenders and $510 million from Canadian lenders.

Some non-bank lenders made it into the ranking, including GE Capital, which is the financial services unit of US conglomerate GE, and also institutional lenders, including insurance companies Metropolitan Life from the US and QBE Insurance from Australia.

These investors supplied funds to US liquefaction projects as they were driven to seek yield in transactions outside their usual sectors as a result of the currently low interest rate environment.

The report said 2014 was one of the best years ever for bank participation on LNG project financings. Banks provided more funding for the sector than 2013’s level of around $9 billion.

Poten said 2015 is shaping up as a busy year for LNG project finance, with the US again set to dominate the scene as Corpus Christi LNG, Freeport train three and SPL train five sponsors look to raise almost $20 billion of debt between them.

While a final investment decision) by Malaysia’s Petronas on Pacific Northwest LNG in British Columbia could bring more Canadian lenders into the ranking.

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