On January 19, Faisal al-Suwaidi, Nakilat’s vice president, announced the company planned to have a fleet of 60 vessels by 2010, 46 of them being LNG carriers and the remainder for transporting liquefied petroleum gas (LPG). The programme foresees Nakilat owning 28 of the 60 tankers outright and having an average stake of 54% in the other ships. The entire acquisition has been valued at $15bn, with Nakilat’s input being $11.5bn.
According to al-Suwaidi, initial plans to limit the company’s ownership levels in the new vessels to between 30% and 60% had been scrapped in order to maximise shareholders’ returns.
Last year, Qatar has announced plans to become the world’s largest single supplier of natural gas by 2011, when a series of new fields are set to come on line. By that date, Qatar expects to be producing 77m tonnes annually, four times its present rate of production. The massive expansion programme being undertaken by Nakilat is both timed to be completed by that date and to allow for Qatar to maximise returns from its exports.
Within a week of unveiling the plans, Nakilat announced it had placed contracts with two South Korean shipyards for the construction of eight new vessels, four QFlex and four QMax, the latter being the largest LNG carriers afloat, with a capacity of 266,000 cubic metres. The last of the new carriers, to be built by Daewoo Shipbuilding and Marine Engineering and Samsung Heavy Industries, are scheduled to be delivered by the end of 2010, with the eight-ship deal having a price tag of more than $1bn.
The new orders are just the latest in a series made by Nakilat in the past year. In total, the company or its subsidiaries have 25 LNG carriers either on the stocks or the order books of major shipyards, valued at $7.5bn.
Nakilat is already a major player in the shipping world, having an average 43% stake in 29 LNG carriers, many of which are in service on routes between Qatar and its clients, mainly in Asia.
To help fund the expansion, Nakilat has called on all of its shareholders to pay in the remaining 50% value of their issued shares by February 15, a move that will bring in $750m.
Though the cash call took some shareholders by surprise, it had been announced three years ago, when Nakilat had its initial public offering (IPO), that all shares would need to be paid in by early 2007.
Following news of the cash call, the Doha Securities Market issued a statement on January 17 that Nakilat would be re-listed on the exchange and have a new opening price after the shares were fully paid in.
Much of the funding for the expansion programme is to come through loans raised on the international market. At the end of 2006, Nakilat announced its wholly-owned subsidiary, Nakilat Inc, had floated loans of around $4.3bn to fund the construction of 16 of the new LNG vessels, with plans to raise another $3.3bn in a second round in 2007.
Away from building up its fleet, Nakilat is also looking to the future in other areas. Late last year, Nakilat and Shell International Trading and Shipping Company signed an agreement that will see Shell provide a range of shipping services to the Qatari firm. Under the deal, set to run for 25 years, Shell will manage the growing fleet and provide training to allow Nakilat to develop its own LNG ship management company. Operational management of the fleet is to be passed to Nakilat within 12 years.
Shell, which is in partnership with Qatar Petroleum in a number of the country’s gas fields, was chosen because Nakilat needed a partner with experience in the sector, al-Suwaidi said on November 20 when announcing the deal.
“We chose Shell because we believe Shell has the track record, knowledge and skills to help us reach our goal,” he said.
It is also planning to develop a large maintenance, repair and construction facility at the port of Ras Laffan, from where much of Qatar’s gas exports will be conducted.
