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UPDATE 1-Ophir to borrow $1.2 bln from Chinese banks for Fortuna floating LNG

(Corrects Fortuna FLNG vessel name to Gandria, not Gimi)

AMSTERDAM, May 8 (Reuters) - British oil and gas explorer Ophir Energy (Other OTC: OPGYF - news) plans to borrow $1.2 billion from Chinese banks to back the development of its Fortuna floating liquefied natural gas (FLNG) export project in Equatorial Guinea.

The project is set to be cleared at the end of June, while the buyer of the LNG and the financial structure underpinning the scheme should be announced by the end of this month, Ophir Energy CEO Nick Cooper said on Monday.

The choice of Chinese banks reflected the unwillingness of Western institutions to back African oil and gas projects, Cooper (Taiwan OTC: 6401.TWO - news) told Cooper an industry conference in Amsterdam..


"We're close to closing that out," he said in reference to the loan deals.

Fortuna FLNG will be Africa's first deepwater floating liquefaction facility, with production capacity of 2.2 million tonnes per year and an estimated start-up in 2020.

Italian oil and gas group Eni (LSE: 0N9S.L - news) is advancing its own FLNG project, Coral, in waters off Mozambique.

Eni expects to approve the investment imminently after a breakthrough in convincing its Chinese partner, CNPC, which had previously withheld its blessing, to back the scheme, industry sources said.

The two African FLNG projects are expected to be the only multi-billion-dollar LNG projects to be given the go-ahead globally this year, as low oil and gas prices make companies rethink investment plans.

Ophir's Cooper said Fortuna FLNG was highly competitive against rival producers, which have heavier capital investments, allowing it to deliver supply to Europe more cheaply than even new projects in the United States.

While Ophir has not announced the identity of the buyer of output from its facility, industry sources have said the majority of interest has come from European players, including utilities.

Shipping company Golar LNG (Frankfurt: 677102 - news) , also a partner in Fortuna FLNG with oil services firm Schlumberger (IOB: 0CT7.IL - news) via a joint venture, will build, own and deliver the FLNG vessel, which is called the Gandria. The Gandria is an LNG tanker which Golar is fitting out with liquefaction technology.

Conversions like these are highly price competitive against traditional and more costly onshore liquefaction plants, said Chris Holmes, managing director of gas and LNG at IHS.

Malaysia's Petronas brought on stream the world's first FLNG project this year, called PFLNG 1. On the other end of the spectrum, the world's biggest FLNG project, the giant Prelude plant being specially built by Royal Dutch Shell (LSE: 0LN9.L - news) for deployment off the coast of Australia, staggers in at a cost of $12 billion. It is due to start next year.

By the end of the decade, 14 million tonnes of FLNG production is expected to come online, Holmes said. (Reporting by Oleg Vukmanovic; editing by Louise Heavens and Alexander Smith)