Oil & Gas Project Finance

Project Economics & Financial Analysis is designed to help participants acquire in-depth knowledge of project financing requirements. It presents a customized treatment for key sectors - oil and gas, power, renewable energy, and PPP infrastructures. The course examines various project financing options and lenders' mindsets.

With renewed interests in stimulating growth in critical sectors of the economy, project sponsors, credit committee members and corporate finance managers are under increasing pressure for sound financial decision making. They must thoroughly understand the financial considerations and risk elements involved in project economics and financing.

Participants will learn how to establish "project bankability", perform sound investment evaluations and select appropriate financing options.

GENERAL ECONOMIC PRINCIPLES

• Types of Money
• Cost of Capital
• Concept of Revenue: Cash Flow and Revenue; Cash Flow & Profits
• Concept of costs: Fixed costs, Variable Costs, and Marginal Costs
• How Costs, Revenues &  Profits Vary with Output

ECONOMIC EVALUATION MODELS

• Steps for Economic Analysis of Projects
• Project Cash-flow profiles and analysis
• Cash-flow items
• Constructing a project cash-flow
• Economic indicators from annual cash-flow
• Calculating a Discounted Cash-flow 
• Net Present Value (NPV)
• Financial Internal Rate of Return (FIRR)
• Modified Internal Rate of Return (MIRR)
• Benefit Cost Ratio, and Payback Periods

INTRODUCTION TO PROJECT FINANCE

• A History of Project Finance 
• BOO, BOT, BOOT, BLT
• Players & Roles
• Identifying and Allocating Risks

SOURCES OF FINANCE: DOMESTIC AND INTERNATIONAL BANK MARKETS

• Domestic Loan Markets
• International Loan & Capital Markets – Banks, Private Placements, Eurobonds 
• Export Credit Support for Loans and Bonds
• Specialized Agencies: IFC and others 
• Equity from Project sponsors and Others
• Syndicated Loan Financing: Factors to Consider
• Lenders’ Security Requirements
• Offshore Accounts and Trustees
• Mortgages on Fixed Assets
• Assignment of all Contracts

DEVELOPMENT FINANCE AGENCIES

• The role of MLA’s 
• Key MLA’s 
• World Bank (IBRD)
• International Finance Corp. (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• Overseas Private Investment Corp. (OPIC)
• African Development Bank (AFDB)
• Other Bilateral Agencies

EXPORT CREDIT AGENCIES

• Guarantees
• Funding – Debt & Equity
• Risk Support Programs of Multilateral, Bilateral & ECA’S

PRIVATE SECTOR AND OTHER SOURCES OF POLITICAL RISK INSURANCE

• American International Group (AIG)
• Lloyds of London
• Commercial Bank Programs
• OPIC and MIGA

PROJECTS FINANCED IN THE CAPITAL MARKETS

• Bond Markets & Rating Considerations
• Investment Funds
• Credit Enhancement through Mono-line Insurers

LEGAL ISSUES

• Legal Environment
• Project Structures
• Project Documentation & Contracts
• Dispute Resolution in Project Finance
• Insurance Agreements

RISK IDENTIFICATION AND ALLOCATION IN PROJECT FINANCE

• Concept of Risk and Uncertainty in Project Finance
• Methods of Risk Identification and Measurement
• Decision Trees & Sensitivity Analysis
• Qualitative and quantitative risk analysis

PROJECT FINANCING APPLIED TO KEY SECTORS

• Oil & Gas
• Pipelines
• Oilfield Development and Platforms
• LNG Facilities
• Oil Rigs and Vessels
• Refineries
• Power Plants & Renewable Energy
• Infrastructure