Moody’s places Baa2 debt rating of Ras Laffan on review for downgrade

Moody's Investors Service placed the Baa2 debt rating of Ras Laffan Liquefied Natural Gas Company Limited under review for downgrade.

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By  Massoud Derhally Published  November 27, 2002

Moody's Investors Service placed the Baa2 debt rating of Ras Laffan Liquefied Natural Gas Company Limited under review for downgrade.

The action is due to the increased possibility of war in the region, as well as the recent increase in global terrorist activity, combined with a likely reduction in the scope of insurance policies to be held by the project. Whilst the rating has always taken into account the risks arising from the geographical location of the projects, Moody's believes
that the overall risk profile of the project has now increased.

The project currently has insurance policies in place that cover terrorism. As is customary, the project does not have insurance in place covering war. Ras Laffan will renew its policies on 15 December 2002.Moody's expects that, reflecting the changes in the insurance market since September 11 2001, the new policies will not provide for
significant terrorism cover for onshore assets in relation to the potential exposure of the project under various scenarios.

The project has a concentration of physical assets on a single site, and also has a high profile in the host country (Qatar). Moody's notes that the project has comprehensive security arrangements in place, in co-ordination with the host Government which is also the majority shareholder. The project also maintains liquidity through reserve accounts to help deal with unexpected events.

As a separate matter, Ras Laffan intends to enter into a lease with the Qatar Real Estate Investment Company relating to the Al Khor housing complex. Moody's notes that this action by itself will not have any ratings impact.

Moody's notes that the project is performing well, with strong cash flow due to the high oil price and high volumes shipped including spot sales.

Ras Laffan is 66.5% owned by the Government of Qatar, and 26.5% owned by ExxonMobil, 4% by Itochu and 3% by LNG Japan; in 2001 it recorded revenues of USD 1.48 billion.

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