EFIC Bonds Help Cement PNG LNG Contract for Wagners (Australia)

Export Finance and Insurance Corporation (EFIC), the Australian Government’s export credit agency, has issued two performance bonds to support the participation of a Queensland construction materials group, the Wagner group of companies (Wagners), in the ExxonMobil-led liquefied natural gas (LNG) project in Papua New Guinea (PNG).

Companies in the Toowoomba-based group have won multi-million dollar contracts to supply, install and operate two concrete plants and to supply concrete and quarry products for the US$18 billion LNG project in the PNG Southern Highlands. Wagners will supply Japanese engineering and construction firms Chiyoda Corp and JGC Corporation, whose joint venture CJJV is building the LNG plant for Esso Highlands Ltd, a consortium led by ExxonMobil.

EFIC has provided two performance bonds to CJJV on behalf of Wagners. ‘The Australian commercial banks would have required full security to issue the performance bonds to a party in a foreign jurisdiction and we couldn’t afford to tie up our cash resources in that way’, said John Watts, General Manager of Wagners Global Services.

‘EFIC’s bonds have freed up our working capital, enabling us to deliver this large-scale contract in a challenging location’, said Mr Watts. EFIC has provided a US$350 million loan to the broader PNG LNG project, joining an international syndicate of export credit agencies and commercial lenders.

‘By participating in the financing of the PNG LNG project, EFIC is supporting Australian exporters like Wagners who are pursuing contracts for the construction phase of the project’, said EFIC Executive Director, SME, Andrea Govaert. ‘So far, Australian companies have been awarded more than US$1 billion of work, and there are further substantial sub-contracting opportunities available’, said Ms Govaert.

Wagners will install and operate two ready-mix wet-batch mobile concrete plants and supply around 130,000 cubic metres of cement for the construction of the LNG plant in Papua New Guinea. Wagners has considerable experience in establishing and operating concrete plants at remote LNG and mining sites, both in Australia and overseas markets such as New Caledonia, Equatorial Guinea, Indonesia and Russia.

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Source: Export Finance and Insurance Corporation, October 20, 2010;