Project Financing in Oil and Gas Industry

COURSE DESCRIPTION: The course will provide an overview of the oil and gas industry and the issues related to finance in this field. Specifically, attendees will explore qualitative and quantitative risk analysis, the mechanics of upstream oil and gas financing, complexities of refinery finance, oil and gas transmission and distribution lending, LNG project finance strategies and Petchem and gas-to-liquids financing.

COURSE SUMMARY:
The training starts with an outlook of the sector and a teaching/group work on qualitative and quantitative risk analysis, in order for participants to fully understand the complexity of the petroleum industry. In particular, few points that will be covered include:

- Basic structure of the international petroleum industry: From upstream to downstream: the hydrocarbon value chain, Upstream: exploration, development and production, Refining :from raw material to end-product, Pipelines: transmission and distribution, Liquefied natural gas: a fuel of the future, Petchem: beyond the burner-tip

- Qualitative risk “template” applied by lenders – what risks are “bankable”

- Different risk/reward objectives of sponsors and lenders: Country/political risk, Sponsors, Reservoir/reserves, Technology and construction/completion, Sales/offtake, Operation & maintenance, Abandonment/decommissioning, Environmental/regulatory

- Ratios and other tools used to determine loan values and balance equity and debt: Key ratios – loan life and project life covers, Balancing equity and debt, Features and design of oil and gas models, Developing an appropriate base case – setting “price decks” and other economic/technical parameters

At a later stage, attendees are introduced to a study of the project financing challenges in separate sub-sectors of the industry, namely:

- Upstream field development: Reservoirs & reserves – a technical grounding, Field development finance in the early days of the north sea, Growth of the independent sector, Emergence of the borrowing base as the tool of choice, European and North American borrowing bases, Structural features of the European borrowing base

- Refineries: Refinery operations – from topping refineries to complex crackers, Greenfield or expansion financing?, Cash flow volatility – the key risk for lenders, Operational mitigation of volatility risk, Debt structuring to mitigate lender risk, Refinery market analysis for lenders, Modelling/sizing debt for refineries

- Oil and gas transportation pipelines and gas gathering systems

- LNG, liquefaction and regasification: Risk profile of liquefaction projects, Arabian Gulf LNG projects – a detailed comparison, LNG regas finance, LNG ship finance, Recent trends

- Petrochemical plants and their risks: Construction – issues and contractual structures, Technology – bankability and licensing, Feedstocks – volume, price and quality factors, Sales/Offtake, agency/licensing issues

- Gas-to-liquids – financing clean diesel projects

- Gas storage

In each of the industry branches, the course will emphasise the following:

- Understanding the particular financing challenges of that industry branch
- Using the risk template and economic modelling to address those challenges and structuring facilities accordingly
- Developing a feel for what is and is not achievable from a financing perspective - and why
- Recognising how structures have changed over time
- Studying where and why structures have not worked

TARGET AUDIENCE: Investment bankers willing to know more about the oil and gas industry, entrepreneurs, business analysts.

Course Reviews:

"This is easily one of the best industry courses that I have taken. The material is delivered in a clear and concise way."
Paula Smith
Commodity Finance, UNIVERSAL EXPORT

"No matter what you initial knowledge is, you will step out of the course with a solid understanding of project financing in the oil and gas industry"
Alexander Yuditsk
Credit Analyst, BLAMMO

"I found the case studies material very useful and I feel my skills have improved a lot thanks to the high level of the material provided”
Ugne Vusekovic
Oil & Gas PF, PETROX OIL COMPANY

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