Many companies are unable to finance such costly projects, which explains the importance of off-balance sheet financing using various debt instruments. Project finance with limited recourse based on future cash flows may be the most suitable option for your LNG project. CLF is ready to offer customized solutions for large LNG plants and other projects, making financing more flexible and affordable. 

 

Oil and gas activities  fall into two broad categories: 

 

 

Upstream: covers any activity of oil and gas companies, from exploration of hydrocarbon deposits to their production (lifting to the surface). 

 

Downstream: activities related to the production of hydrocarbons and their subsequent transportation through pipelines, processing and sale.

 

An economic analysis of the activities of a particular oil and gas company (investment project) should take into account production and processing in general. Industry-wide, upstream activities cannot be adequately assessed without analyzing downstream activities.

Investment activity factors

 

The final price for hydrocarbons represents the intersection of supply and demand.

However, in the short term, certain geopolitical processes (for example, military conflicts in oil-producing regions of the world) or large-scale financial changes can affect prices more than economic considerations.

 

For example, probable reserves account for a significant portion of the reports, so it is more correct to view actual production as a proposal. The price of oil and oil products will ultimately be among the deciding factors (along with the potential of oil fields) when investing in oil exploration, production and refining. The regulatory framework is also vital due to the long payback period for this type of project. This cycle can span up to 5 years for the construction of a refinery, or up to 10 years from the date of exploration to the sale of oil or gas to the market. The hydrocarbon production and processing industry is a striking example of the economy of scarce non-renewable resources. The more oil and gas produced, the less hydrocarbons remain underground and the more difficult it becomes to extract them.

 

On the one hand, this makes oil and gas companies look for hydrocarbons in remote, hard-to-reach areas. On the other hand, refineries are increasing the efficiency of crude oil refining and require periodic expensive modernizations, which further increases costs. This is a distinctive feature of the oil and gas industry, which adjusts prices based on demand (as in most sectors), as well as on the basis of natural resource decline. Obviously, maintaining a growing or at least constant supply requires huge capital investments over many years. In this context, the correct choice of sources and instruments for financing large investment projects becomes fundamental for the economic viability of each company.

 

Refining efficiency as the key to business success Oil refining is a manufacturing process that converts crude oil into valuable commercial products. This production is focused on markets that consume distilled products such as naphtha (light product); kerosene, diesel and fuel oil (intermediate products), and heavy products that are used for the production of asphalt and lubricants. The refining process also produces liquefied gases, including butane and propane. Refinery efficiency is essential to maintaining high profitability. For example, heavy fractions can account for up to 40-45% of all refined products. If the residual oil is not used (for example, for the production of lubricants), the economic efficiency of the entire process will be low.