The state-run Korea Trade Insurance Corp., known as K-sure, and Korea Export-Import Bank will offer $1.5 billion in loans to the “Sabine Pass” liquefied natural gas project in the U.S., K-sure said on Monday.

The LNG project refers to the LNG-related facility expansion project at Sabine Pass in the state of Louisiana, which will allow the U.S. to export LNG for the first time in its history. The U.S. government has stepped up lifting a ban on LNG exports in line with the rising supply of natural gas, caused by the recent shale gas boom. 

The project, led by U.S.-based Cheniere Energy, had sought international loans to finance $8.8 billion of the total cost of $12.5 billion required to build four liquefaction trains at the project site.

“The partial financing of the ‘Sabine Pass’ LNG project was a precondition of a contact signed between the Korea Gas Corp. and Cheniere Energy last year. With the loan-offering by the two state-run banks, KOGAS will be able to import approximately 3.5 million tons of LNG per year from the Sabine Pass Liquefaction Train 3 for 20 years starting from 2017 as signed,’’ K-sure said.

“The joint project financing is also meaningful in that it will facilitate cooperation and exchanges among state-run banks,” said Choi Sang-bong from K-sure.

Four state-run banks ― K-sure, Korea Eximbank, Korea Development Bank and Korea Finance Corp. ― had been involved in financing large-scale engineering, procurement and construction projects independently until they launched a committee meeting to discuss joint project financing.

“Since last June, representatives from the four state-run banks have held a committee meeting on a quarterly basis and they discussed how to finance the ‘Sabine Pass’ liquefied natural gas project,” Choi said.

In addition, the committee is open to local private banks in a bid to offer local banks a chance to raise project financing capacity, K-sure said. Local banks have been less experienced in financing overseas EPC projects compared with foreign financial institutions.

According to K-sure, seven private banks, including Kookmin Bank, Industrial Bank of Korea and Korea Exchange Bank, took part in issuing $1.5 billion worth of loans to the U.S. LNG project.

By Seo Jee-yeon (jyseo@heraldcorp.com)