Amid financial turmoil, mandated lead arranger State Bank of India closed a Rs24 billion ($504 million) financing for Petronet LNG's Kochi LNG regasification terminal project in Kerala, India in October 2008.

The plant is India's fourth LNG terminal after Dahej, Dabhol and Hazira and is located in the Puthuvypeen Special Economic Zone (SEZ) in Kochi. The project is engaged with Exxon Mobil to source around 2.5 MMTPA from the Gorgon LNG project in Western Australia.

The Kochi project is strategically important and goes a large way to satisfy the demand for natural gas for power, fertilizers, petrochemicals and general industries in the Southern States. Once the Kochi terminal is complete, Petronet can leverage GAIL's Kochi-Bangalore pipeline to transport RLNG to nearby regions which currently cannot be serviced due to lack of the pipeline connectivity.

The deal comprises a Rs14 billion 13-year term loan with a margin of 125bp under SBAR and a Rs10 billion foreign currency portion solely provided by the International Finance Corporation.

Bank allocations were SBI Rs4 billion, Canara Bank and Syndicate Bank with Rs2.5 billion and Rs2 billion respectively. Jammu & Kashmir Bank, Oriental Bank of Commerce, State Bank of Hyderabad and State Bank of Travancore with Rs950 million apiece. State Bank of Indore joined with Rs700 million, while Federal Bank and State Bank of Patiala both held Rs500 million each.

Petronet LNG is a joint venture between the Indian government and GAIL, Oil & Natural Gas Corporation Ltd (ONGC), Indian Oil Corporation and Bharat Petroleum. The project will be in two phases - an initial capacity of 2.5 MMTPA that will be expanded to 5 MMTPA by 2012.

Petronet LNG Ltd

Status: Financial close 24 October 2008
Description: Rs24 billion ($504 million) financing for Petronet LNG's Kochi LNG regasification terminal project in Kerala, India.
Sponsors: Oil & Natural Gas Corp Ltd (ONGC); Gas Authority of India Ltd (GAIL); Bharat Petroleum Corp Ltd; Indian Oil Corp Ltd
Financial adviser: State Bank of India Capital Markets
Lead arrangers: State Bank of India; International Finance Corporation
Participants: Canara Bank; Jammu & Kashmir Bank; State Bank of Hyderabad; State Bank of Indore; State Bank of Patiala; Syndicate Bank; Oriental Bank of Commerce; State Bank of Travancore; Federal Bank
Legal adviser to sponsors: Trilegal
Legal adviser to lenders: Amarchand & Mangaldas & Suresh A Shroff & Co
EPC contractor: Ishikawajima-Harima Heavy Industries Co Ltd