Long-Term Loans and Financing for Oil and Gas Refinery Construction

History has it that refinery and petrochemical complex at Jubail will convert heavy crude into 400,000 barrels a day of higher-value refined products such as diesel and jet fuels. It will also produce a range of petrochemicals. Long- term loans and financing for oil and gas refinery construction was completed in the first quarter of 2012 in Saudi at about $8.5bn with came from multiple sources. — $4bn from international export credit agencies and Saudi Arabia’s Public Investment Fund, and $4.49bn from commercial banks, according to industry newsletters.

In order to obtain financial resources for the development of oil production, transportation and refining, it is extremely important for management to understand the principles of the capital market, financial mechanisms and available options applicable to the hydrocarbon industry.

Currently, project finance for the construction of refineries and long-term loans for equipment modernization play an important role in the development of the industry around the world. The economic recovery after the crisis requires significant supplies from the oil and gas industry. This provides a powerful impetus for financing the construction and expansion of oil refineries (downstream), as well as for investing additional capital in the exploration and operation of oil fields (upstream) to ensure stable growth.

These are capital-intensive projects that start with the development of oil fields and end with high-tech oil refining and large-scale logistics projects.

Long Term Financing and Loans for Oil and Gas Refinery

Principles and problems of financing the Construction of oil Refinery.

The construction of Oil and gas refinery fall into two broad categories:

Upstream: This takes up all related activities of oil and gas industries, from exploration of hydrocarbon deposits to their production (lifting to the surface) and Downstream: A related scenario that undertakes the production of hydrocarbons and their subsequent transportation through pipelines, processing and sale.

Corporate finance for the construction of oil Refinery

The main predicaments facing the oil and gas industry is simply to attract sufficient financial resources on acceptable terms at the right time to start and develop activities. Solving this problem allows businesses to conquer markets, build competitive advantage and thrive in times of economic uncertainty and global transition to a green economy. Corporate finance refers to raising and managing the financial resources of a business.

Long-term loan for the construction of gas refinery

Long-term financing/loans for construction of oil refinery is based on the issue of shares and long-term bank loans against the future cash flows of the projects.

While the former financing instruments are more typical for private companies, the latter are widely attracting both state-owned oil refineries and private capital.

Long-term corporate Debt for Construction of oil and gas Refinery

Debt financing for the construction of an oil refinery can be obtained by issuing corporate bonds. These bonds can be secured by any asset (for example, structures, resources or equipment) or issued without collateral, which is possible only for the most attractive projects.

Debt is an obligation to the creditor that must be repaid with interest within a predetermined time frame.

When companies apply for loans, they agree to pay interest as scheduled and repay the principal. Unlike dividends, interest must be paid according to the schedule, so it refers to the company’s financial liabilities. The amount of debt is strictly limited by the loan agreement, in contrast to dividends, which are determined only by the company’s profit and its financial strategy.

Debt does not give the creditor the right to manage or own the business; creditors are not allowed to vote or share in the profits of the company.

Project finance for the construction of oil refineries

Project finance as a concept refers to targeted financing of large refinery projects and other facilities, which is based on the ability of the project itself to generate sufficient cash flows to service debt.

This is a kind of off-balance sheet financing, when the project debt is separated from the financial statements of the originator and does not affect its creditworthiness. In typical project finance, the collateral (security or guarantee of the lender against default by the borrower) is the project assets, but not the initiator’s assets.

An integral part of project finance in comparison with direct financing (traditional loan) is that in the first case, the lender provides financing to the special-purpose vehicle, but not to the originator. The SPV / SPE institution financially separates the project from its originators.

Project finance has always been in great demand in the implementation of large projects as construction of oil refineries. Its explosive growth began in the 1970s with the financing of oil production in the North Sea and Australia. Today, the PF gives petroleum producers access to affordable and flexible financing for large-scale refinery construction and modernization projects.

Havelet Finance Limited Provides 100% project finance and loans for the construction of oil refinery globally at a flexible and affordable rate. Contact us to find out more.

Loans for the modernization of refineries

The modernization of refineries consists in the organization of investment measures aimed at improving production through consistent constructive and organizational changes.

These changes must be comprehensive to ensure that the enterprise fully complies with the organizational, technical and environmental standards of the industry.

In other words, the attention of management is shifted to the implementation of sequential investment operations aimed at the practical use of new scientific and technological knowledge in order to achieve commercial success.

Financing oil and gas projects on the best terms

The success of large projects in the oil and gas industry is based on the ability to generate stable cash flows over the long term. Deciding on long-term financing for the construction or modernization of a refinery is critical to business in a highly competitive environment.

The mission of the company’s management is to make every investment decision as effective as possible and to find a way to implement an investment project that will bring the company a higher value. The subsequent operational phase of the project will require new solutions for financing working capital to ensure the operation of the refinery complex.

Traditional corporate finance can come from a variety of sources, such as equity increases, bond issues, leasing, lending, or various combinations of debt and equity financing. The finance department of the company must recommend the best alternative for the most acceptable investment solution (for example, the development of an offshore field or the construction of a refinery). Correctly selected financial models and sources determine the value of the future project. The oil and gas industry today uses a variety of financing instruments to realize growing investment opportunities, increase profitability and reduce risks.

It is important for oil and gas companies to find a source of long-term financing with flexible terms, since the long construction time of refineries and high initial investment costs increase the risk and uncertainty for potential investors. Detailed study of all aspects of the project, professional financial modeling and negotiations with a wide range of stakeholders are important in this context. At all stages of the project, companies need reliable financial partners and professional consultants who are ready to attract the resources on favorable terms and support the company’s efforts.

We offer a wide range of services for business:

• Project finance services and loans for construction of oil refinery
• Financial modeling and consulting.
• Loan guarantees and much more.

We support the financing of large projects in the field of oil production and refining, develop advanced financial models for our clients and offer professional advisory services.

We are also currently structuring a convertible debt and loan financing and other project financing and international loans at of 2% interest repayable annually with no early prepayment penalties.

Website: https://www.havelet-finance.com
Email: credit@havelet-finance.com