In this interview with Daniel Nanson, Managing Director – Canadian Corporate Banking at Mitsubishi UFJ Financial Group (MUFG), we discuss the main criteria that investment partners look for in LNG projects as well as project financing and the role of Government in supporting Canada’s LNG industry.
Gastech News: At the upcoming Canada LNG export conference, you will participate in a panel discussion on “Building Capital Investment Partnerships and Government Supports”. From your point of you, what are the main criteria that investment partners look for in LNG projects?
Daniel Nanson: Partners will look at overall project viability from a combined cost, risk and overall market rationale. They will also consider the ranking of each project against global competitors in terms of costs, reliability of supply and political risk. The supply requirements at the final market will also be closely considered. In today’s market, having an established market need for gas 5+ years out is key for any new projects. To achieve adequate levels of reliability, risk and cost: partners need to see strong equity sponsors, technical capability and solid gas reserves. The all-in cost of the delivered gas, the total project risk and the cost of the delivered gas have to make sense, not only today, but decades into the future.
Gastech News: What can be expected in terms of project financing for Canada’s LNG export projects?
Daniel Nanson: Many banks are looking to manage their overall exposure to the energy sector, several due to regulatory pressure. This will likely result in capital going to lower risk projects such as those structured as tolling projects, and away from riskier merchant risk projects. This may also increase the value of tools used to mitigate the impact of construction risk such as sponsor completion guarantees, or wrapped EPCs. We may also see increased use of multiple markets for larger projects, for example using combinations of banks, ECAs, project bonds and life co’s.
Gastech News: What should the Canadian government do to support the industry?
Daniel Nanson: The best thing the Canadian Government can do to support the industry is enhance the approval process. Enhancing clarity around time lines and processes will always help decision makers plan their internal road map to FID. Anything that adds to project certainty from costs to timing will help the industry. We also think that further clarity on how foreign companies can work together with stakeholders outside of the industry could be beneficial for both parties.
Gastech News: What are you most looking forward to at this year’s Canada LNG Export Conference, and what is your final message to our readers?
Daniel Nanson: I am looking forward to hearing the project sponsors' view on the viability of the BC projects. I am also keen to hear from those that will be heavily impacted by these projects (if they do or do not happen). These conferences are a great chance to hear from a broad range social, economic and other interests.
Daniel Nanson, Managing Director – Canadian Corporate Banking at MUFG, will be speaking at the Canada LNG Export Conference and Exhibition in Vancouver next week (10-12 May), a platform to discuss new global and domestic gas market opportunities.
Join the Conversation: Talking about the main criteria that investment partners look for in LNG projects, has Daniel missed out any key factors? Let us know your views.
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