RATING DRIVERS
Supporting Factors:
- Low construction/completion risk supported by a valid Fixed Price Lump Sum Turnkey (LSTK) Contract with Plant Performance Guarantees, though beset by delays in achieving commercial operations
- Reputable and commercially tested technology maximizes the likelihood of a successful operation
- Legally binding supply and offtake agreements in place with a high likelihood of being enhanced with more favourable terms and conditions
- Critical importance of the end products and a changing regulatory and macroeconomic environment underpin favourable demand conditions
- Favourable projected financial performance with adequate debt servicing capacity based on its operational efficiency guarantee output level
- The Owner-Controlled Insurance Program (OCIP) insurance wrap policies serves as an additional layer of protection to the lenders
- Knowledgeable and experienced Board of Directors and Executive Management team, within a good supporting organizational structure
Constraining Factor:
- Vulnerable to the cyclicality of global energy prices
Rating Sensitivity Factors:
Factors that could individually, or collectively lead to an improvement in the ratings/outlook:
- Higher than projected revenues and profits based on favourable selling prices and lower than projected operating costs
Factors that could individually, or collectively lead to a lowering of the ratings/outlook:
- Failure to obtain LRT or the inability to obtain approval for a further extension from noteholders by June 30, 2022.
- Unsuccessful start-up of full commercial operations by June 30, 2022 and/or production falling below 2,400 bpd.
- A fall in the Interest Cover to below 2.4 times and/or a drop in the Effective Debt Service Coverage Ratio to below 1.4 times post start-up.
COMPANY BACKGROUND
NiQuan Energy Trinidad Limited (NETL or the company) is a limited liability company incorporated on July 17, 2012, in the Republic of Trinidad and Tobago (T&T). The principal activity of NETL is to complete, commission, and ultimately operate the former World GTL Trinidad and Tobago Limited (WGTL) plant, which when completed, will produce zero sulphur diesel and naphtha via the Gas-to-Liquids (GTL) process[1]. As at December 2021, NETL’s shareholders comprised of NiQuan Energy, LLC (NQE)[2] (75.7%), as well as institutional and individual investors (24.3%).
The WGTL plant was originally designed and developed under a joint venture between the Petroleum Company of Trinidad and Tobago (Petrotrin)[3] and a private developer. The WGTL initiative was premised on the notion that a gas-to-liquids plant was required to improve the quality of the diesel and other refined products from the Petrotrin refinery, given the high level of sulphur content and the increasingly stringent regulations arising in the international markets for refined products regarding sulphur levels. Construction of the plant commenced in 2007 and the cost of construction was estimated to have been of the order of US $135 million. In 2009 the project fell into bankruptcy because of significant cost overruns, delinquency on the part of the joint venture partner to fund its portion of the project, and failure to meet project deadlines.
Analytical Contacts:
Musa Abdullah
Tel: 1-868-627-8879 Ext. 233
E-mail: [email protected]
Anelia Oudit
Tel: 1-868-627-8879 Ext. 226
Mobile: 1-868-487-8364
E-mail: [email protected]
Website: www.caricris.com
Email: [email protected]
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