The deal is the explosive finale to a year that has seen Qatar raise $2.2 billion of international project finance. Against the odds the transaction took only 3 months to close. A combination of the emerging markets crisis, deals like QVC and Nodco, which were not a great syndication success, and low oil prices, cast doubt on the ability of arrangers to locate enough appetite for the deal at the retail level.

Most of the deal's 24 arrangers would have been pleased if it had raised $100 million in general syndication. But a new group of investors has been assembled in a deal structured very much along European lines with risk spread among as many banks as possible.

Banks which came into the deal in general syndication are Abbey National Treasury Services, Bank Austria Creditanstalt, Commercial Bank of Qatar, ING Bank, Landesbank Baden-Wuerrtemberg, Riyad Bank, Saudi Investment Bank and Bank of Scotland.

The deal marks a number of firsts. This is the first cross-border deal that Saudi Arabian banks have lent to - a move which required clearance from the Saudi Arabian Monetary Authority: the deal also passes through an offshore security trustee - ABN Amro-owned LaSalle Bank, Chicago. It also marks a first for lending to a Qatari project for Abbey National Treasury Services and for Landesbank Baden-Wuerrtemberg.

Similarly, the deal has attracted the strongest turnouts yet by German banks in a Gulf project and marks the return of Japanese institutions to the region.

Three tickets were offered to banks - co-arrangers with takes of $20m for fees of 75bp; senior lead managers with takes of $15 million for fees of 65bp; and, lead managers with $10 million for fees of 55bp. Q-Chem advisor Greenwich NatWest insisted that banks put in individual bids and that anyone coming in at arranger level also had to come in at co-arranger level. Almost all of the banks came in at the highest level.

The deal is priced at 70bp over Libor pre-completion, 125bp post-completion to year six from financial close and at 140bp until year 10. The final step-up takes the margin to 160bp until maturity at 13 years.

Arrangers are ABN Amro Bank (security trustee and accounts bank), ANZ Investment Bank, Apicorp (regional bookrunner), Bank of Tokyo-Mitsubishi, Banque Nationale de Paris, Barclays Capital (documentation bank and facility agent), Bayerische Hypo-und Vereinsbank, Bayerische Landesbank, CIBC, Commerzbank, Credit Lyonnais, Dai-Ichi Kangyo Bank, Deutsche Bank, EDC, Fuji Bank, Greenwich NatWest (government advisor), Gulf International Bank, HSBC (international bookrunner), Industrial Bank of Japan (technical bank), KBC Project Finance, Paribas, Qatar National Bank, Royal Bank of Scotland (modelling bank) and WestLB (insurance bank).

The information package for the latest tranche of the NGL-4 financing is also imminent. Linked to Q-Chem through construction contracts - one cannot be built without the other - advisor Greenwich NatWest had to run both financings back-to-back to get the most competitive pricing.

Banks likely to be approached for the next NGL-4 tranche are the international arrangers of the existing $400 million receivables backed facility which was signed earlier this year. These are ABN Amro, Apicorp, Banque Nationale de Paris, Barclays Capital, Chase (collateral agent), GIB, Greenwich NatWest, HSBC, IBJ, Paribas, SG and Sumitomo. Greenwich NatWest is financial adviser to the sponsor Qatar General Petroleum Corporation.

The new tranche should be worth up to $400 million and could be structured towards the capital markets rather than the syndicated credit market which was used for the existing facility.

The project is designed to produce 875,000 tonnes of ethane, 735,000 tonnes of propane, 490,000 tonnes of butane and 315,000 tonnes of NGL condensates a year. The $430 million construction contract for NGL-4 was awarded in September to a joint venture between Hyundai Engineering & Construction of South Korea and Snamprogetti of Italy.

Most of the NGL-4 production will be used by Q-Chem, which will give Q-Chem a competitive cost advantage over more common naptha-based producers. Lenders exposure to Q-Chem volume risk has been mitigated by 100% offtake support from Phillips Petroleum (49% shareholder in Q-Chem) which will undertake to market the product in Asia, Europe and the Middle East.

The first civils subcontract has been let on Q-Chem by the main contractor, the US/French group of Kellogg Brown & Root (KBR) and Technip. The local developer Midmac Contracting has taken the site preparation package. The next civils subcontract award is expected to be for the offshore marine works, for which final bids were submitted by international contractors in late September. The KBR/Technip group was awarded the contract to engineer, procure and construct the plant in late August.

A post-completion Q-Chem capital markets issue that takes out 50% of bank debt is still on the cards. However, the decision to issue will be dictated purely by market and price conditions.

Post-Q-Chem, Qatar is entering a quieter period for project finance. A further $340 million will be required for the Nodco refinery - but QGPC has indicated the cash will be raised domestically. However arrangers claim the market is likely to pick up again in 2001 and although the Q-Chem structure may not be seen in Qatar again for some time, it is almost certain to be widely copied throughout the Gulf in the coming year.