Oil and Gas Downstream Projects

Download: Accelerating Oil and Gas Downstream Projects


Project Finance in Accelerating Oil and Gas Downstream Projects

A downstream operation refers to those projects that process extracted resources to make them into usable end products or a source of energy supply, including by way of power plants, refineries, LNG liquefaction and regasification facilities and petrochemical plants.

Offtake arrangements in the downstream context can be by way of long-term sole offtake contracts where, for example, equity stakeholders, a government entity or industry, purchases all of the refined oil products or LNG, as the case may be.

Alternatively, and depending on the type of product, sales may be structured by way of short-term or spot sales contracts or through a separate marketing incorporated joint venture (IJV) selling to end users. Again, in all cases, the lender’s focus will be on the ability of the project to meet its debt service requirements.

Key Enablers in these are that (1) Oil and Gas Downstream Projects may be open to market risk where no offtake agreements exist (e.g., fertilizer plant and process plants) (2) Its attractiveness is mainly driven by strong market fundamentals in countries dependent of fossil fuel and export potential.

Balancing economic development with environmental sustainability remains a key challenge. It is imperative for the sector to leverage adapting to change, adopting innovative approaches and fostering sustainability for resilient growth in the industry.

In addition to the above, this White Paper prepared by the Brickstone Africa Team, in much more detail explains the Key issues for consideration by developers in Accelerating Oil and Gas Downstream Projects.

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