Fitch Affirms Ras Laffan Liquefied Natural Gas Company Ltd (II) and (3)'s $5.075bn Bond 'A+'

The obligations of each borrower are guaranteed by the other entity.

RasGas (II) and RasGas (3) are owned, either directly or indirectly, by Qatar Petroleum (QP: around 70%) and Exxon Mobil Corporation (EM, rated 'AAA'/'F1+': around 30%).

The 'A+' ratings reflect the Project's low break-even prices and the diversity of revenue streams both in terms of products and markets. While construction progress to date is satisfactory, the rating is nonetheless constrained by the remaining construction period, particularly given that the scope of trains 6 and 7 is larger than any in existence today.

The Project is expected to account for approximately 12% of worldwide and 40% of Qatar LNG production. The scale economies and a long debt tenor provide the Project with strong economics with average nominal break-even prices of USD1.99 per mBTU (decatherm) for Henry Hub and USD14 per barrel of Brent. This project is extremely important to both QP and EM, as demonstrated in the maintenance of ownership clause. The importance of this project is also demonstrated by QP and EM's downstream commitments in regasification terminals and the EM co-lending.

A new state owned entity, Qatar International Petroleum Marketing Company, (Tasweeq), has been established to market Regulated Products including liquefied petroleum gas (LPG), condensate and sulphur exported from the Ras Laffan Industrial City. The objective for Tasweeq is to maximise the global market value of regulated products exported from Qatar, improve the logistical efficiency of exports and therefore assist producing entities to optimise production of LNG. While Rasgas and all other producing entities in the Ras Laffan Industrial City are now legally required to sell all by-products to Tasweeq, they will receive a price equal to a weighted average netback price less marketing costs, Fitch expects this marketing arrangement will have a neutral to positive impact on Rasgas cash flows.