Euromoney Audit Training

Course overview

Even the most carefully structured energy project finance deals can face difficulties in attracting sufficient funding from international and local investors. Project developers, equipment suppliers, bankers, other creditors and investors must be properly equipped to analyse and explain the risks and prospects for a project’s future performance.

This course will teach you how to structure upstream and downstream oil and gas projects including field development, rigs, platforms, pipelines, and other transportation infrastructure. The course will also examine LNG, fertilizer transactions, and power deals. By the conclusion of the course you will have developed a framework for recognising and analysing qualitative and quantitative project risks when financing green field projects as well as facility upgrades in the energy sector. You will also understand how excel models are used to assess project debt capacity, return on investment (ROI), and other metrics common to attractive deals.

Numerous examples of projects from the region and around the world are employed throughout the course to ensure understanding and application of concepts. The course includes recent examples of structured financing attractive to banks, bond investors, lessors and Islamic investors as well as applications of energy related derivative instruments to enhance financing. Finally, we also pay careful attention to fund providers and credit enhancers such as Export Credit Agencies and International Financial Institutions (IFIs) like IFC, Islamic Development Bank, European Investment Bank, and other Bi-laterals.

The fifth day is a stand-alone cash flow modelling workshop. Using excel software, you will create a model for an LNG Plant to test for project debt capacity as well as return on investment.

Summary of course content

• Project finance in today’s challenging markets
• Structuring large oil and gas field development projects
• Financing pipelines, oil rigs, platforms, and other infrastructure
• LNG and fertilizer plants
• Power project finance
• ‘Green’ energy deals and carbon credits
• Developing pro-forma estimates and cash flow models
• Working with banks and other debt providers
• Understanding key legal risks in projects
• Official providers of funds and credit support (export credit agencies, development banks and others)
• Managing price volatility in energy deals

Methodology

Lecture sessions, innovative deals and numerous examples of projects in the oil and gas, power and water desalination sectors are drawn from around the world and discussed throughout the course. You will develop a framework for recognising, and analysing qualitative and quantitative project risks.

Who should attend this training course?

• Financiers involved in project finance, investment analysis and syndicated lending
• Government and parastatal executives involved in sponsoring/assessing project finance deals
• Institutional bankers
• Corporate bankers
• Commercial and investment bankers
• Project sponsors
• Development banks
• Contractors
• Accountants and lawyers
• Project consultancies
• Export credit agencies

Supporting publications

  

 

 

DAY ONE

Themes: Energy markets; varying approaches to financing different types of energy projects; qualitative and quantitative analysis; cash flow modelling.

Oil, gas and power project finance today

• The changing market for financing energy transactions:
• Special features of limited recourse projects
• Corporate balance sheet usage
• Electricity and BOO, BOT, BOOT, BLT, etc.
• Private sector providing public services
• Players and their roles
• Steps in a project financing
• Types of projects and their comparative complexity

Identifying and allocating risks Risk identification and allocation in oil gas and power project financing: different approaches/differing risks

• Financing structures: limited recourse vs. balance sheet deals
• Pipelines
• Field development and platforms
• Production facilities
• Refineries and petrochemical plants
• Power plant

Sources of finance: a financing checklist

• Domestic borrowing
• Loans from international banks
• International capital markets: eurobonds, private placements
• Export credit support for loans and bonds
• Specialised agencies: IFC and others
• Leasing
• Equity from project sponsors and others
• Derivatives usage

Building a risk matrix

• Risk allocation between sponsors, creditors and others
• Technology and construction/ completion
• Reservoir/reserves risks
• Feedstock risk
• Sales and off-take, operation and maintenance
• Abandonment/decommissioning
• Environmental/regulatory issues
• Country/political risk

Quantitative analysis: designing pro-forma energy project models

• Approaches to modelling for oil and gas transactions
• Debt providers: DSCR, loan life, and other key ratios
• Balancing equity and debt suitably in different types of projects
• Developing an appropriate base case/running sensitivities
• Perspective of the sponsor and measures of investor return

Case study: financing an ammonia plant

Participants break into small groups to evaluate this security package this gas processing plant.
A computer simulation quantifies risk assessments.

DAY TWO

Themes: Legal issues to consider in accessing finance; bank markets; credit enhancement with ECAs;
upstream oil and gas field development

Case discussion: fertilizer

Legal issues in energy finance

• Legal environment for energy deals
• Commercial points and legal points in various project structures
• Incorporated and unincorporated joint ventures
• Partnerships and Limited Partnerships
• Separate and common financing in natural resources projects
• Key contractual agreements and structuring considerations

Domestic and international bank finance

• Club loans and bank syndicates: primary and secondary distribution
• Pricing, flexibility, timing in the sector and today
• What security do banks want?
• Offshore accounts and trustees
• Mortgages on fixed assets / contract assignments
• Swap requirements and other derivatives usage: interest rate and currency
• Recent structures; case examples from Africa and the Middle East

Sources of risk support: Export Credit Agencies (ECAs)

• Official guarantees, insurance and funding programmes for energy transactions
• Incentives in ECA programmes
• Which are most popular today?
• Costs and availability

Upstream oil and gas: oil and gas exploration, development and production

• Structure of the oil and gas industry: upstream, midstream and downstream
• Hydrocarbon basics: geology, reserves
• Supply and consumption, OPEC, etc.
• Oil production: process depletion and enhanced recovery
• Major systems and types of drilling equipment
• Offshore oil platforms in shallow and deep water

Case study: financing a condensate field development

Participants break into small groups to evaluate the security package and forecasted cash flows for an upstream condensate field development  project.

DAY THREE

Themes: Alternative sources of finance and capital markets; energy price volatility management techniques; leasing and equipment finance

Case discussion: oil field development

Sources of risk support: development banks (IFIs)

• Key IFIs and programmes
• World Bank Group: World Bank, IFC, MIGA, ICSID
• Other multilaterals: Africa development bank, Islamic development, Inter-American development bank etc.
• Bilaterals: U.S. OPIC, FMO, Proparco and others

Accessing capital markets for projects pre- and postcompletion

• Capital markets and examples of projects
• Rule 144A and Eurobond financing
• Mezzanine Finance
• Infrastructure investment funds
• Rating agency criteria
• Construction finance vs. operating projects
• Greenfield vs. Brown field projects
• Crude oil export receivables securitisation
• Examples: Ras Laffan Qatar, Nigerian LNG, Trinidad

Oil and gas transportation/ shipping

• Logistics: pipelines, shipping, storage
• Types of tankers
• Average Freight Weight
  Assessment classes (AFRA)
• ULCC to tanker lightering
• Understanding charters; time and voyage

Refineries: simple and complex

• Refined production
• Simple or topping refineries; vacuum distillation
• Complex refineries
• World profile and current transactions in Asia

Leasing equipment

• Objectives and structures
• Costs and calculations
• Applications in energy project finance

Case study: rig finance

In small groups participants will assess a proposed bond issuance to refinance a semi-submersible rig conversion. Evaluating operating cash flows.

DAY FOUR

Themes: Islamic finance; derivatives usage for energy price management; power markets power project financing

Case discussion: rig finance

Islamic financing alternatives for energy projects

• Structures: Istisna, Ijara, Sukuk
• Examples: Petro-Rabigh Saudi Arabia, others

Managing oil price volatility with derivatives

• Oil and gas price markets and players
• Oil and natural gas swaps and options
• Costs, structures, indices, applications
• Recent examples of usage

Introduction to power project financing

• Constructing a power risk matrix
• Understanding different types of thermal plants
• Peakers vs. base-load facilities and power dispatch curves
• Combining water desalination and electricity production
• Rating agencies’ analytical model

Case study: financing a thermal power plant

Participants will break into small groups to evaluate the security package for this cogeneration plant. A computer simulation is used.

Market forces and effect on electrical supply

• Fragmentation of electricity generation
• Gencos
• Transcos
• Discos
• Merchant power plants with uncontracted sales
• Tolling arrangements
• Renewable energy: financing wind, solar and bio-fuel plants
• Comparative costs and “grid parity”
• Government support schemes for renewable projects
• Understanding carbon markets

Conclusion and self-test

DAY FIVE

Themes: LNG project modelling workshop

Participants build a pro-forma cash flow model for a Liquified Natural Gas (LNG) facility. They assess a wide range of scenarios in order to test a limited recourse financing package, the project’s debt capacity, and its suitability for investment. Discussion of common approaches to modelling was well as Excel, ‘dos’ and ‘dont’s’. Further practical uses for models in negotiations are described.

Modelling workshop overview: objectives and approaches

• Constructing a model/common myths
• Variations by project type

Structuring the model and organising the data to create a cash flow statement

• Developing the assumptions page
• Construction costs and timing
• Operating cost, plant capacity usage, fixed and variable costs reinvestment, plant expansion,
  productivity shifts Financing section
• Equity first or pro rata manually designed equity subscription
• Draw-down of debt linked to specific contracts or expenditures or in a hierarchy
• Funding the debt service reserve account

Developing profit and loss and balance sheet statements

• Factoring in reserves
• Considering currencies
• Tax calculations

Ratios and sensitivity analysis: objectives and limitations

• Measuring debt capacity and investor return
• Using modelling output for initial project vetting
• Supporting on-going negotiations

Summary and conclusion of modelling workshop

• Margaret Osius

  Ms. Osius provides executive level training and advisory services to a wide variety of organizations worldwide. Specializing in international project finance, capital markets and risk management, she works with project developers, investors, equipment suppliers, private and development bank clients, law firms and others to structure viable financing for green-field projects and facility upgrades in the oil and gas, power, transport sectors. Prior to establishing her own firm Ms. Osius was at JP Morgan Chase Manhattan Bank where she structured export and international project transactions and advised clients on foreign exchange and other risk management issues. Earlier in her career, Ms. Osius was responsible for a team of credit analysts evaluating the quality of the bank’s distressed loan portfolio as well as that of its newly acquired affiliates. In that role she had extensive experience with workout. Ms. Osius has published articles in the business press and co-authored several selfstudy guides covering international project finance, trade and export finance, foreign exchange, and financial futures. The World Bank has published her views on approaches to financial analysis in emerging markets. She is a primary speaker in a series of video presentations created to cover the topic of Sound Banking Principles and Project Finance during executive sessions throughout the world.
  
  Until 2007 Ms. Osius was Chairwoman of the Technical Advisory Panel of the Public Private Infrastructure Advancement Fund (PPIAF). The Fund provides technical assistance to encourage private involvement in infrastructure development. She received an M.B.A. from INSEAD, the European Institute of Business Administration, in France. Her B.A. degree is from Princeton University.

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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21-23 May 2012 (Hong Kong, Hong Kong)

'Project Finance Modelling' is designed to support middle and senior managers dealing with financial models from disparate sources, to enable them to be compared and analysed on a consistent and focussed basis.

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18-20 Sep 2012 (Singapore, Singapore)

This course shows you the most effective approaches to financing renewable projects in many parts of the world, focusing on how these transactions differ from more conventional deals

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15 Oct 2012 (Sydney, NSW, Australia)

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Mining Project Finance

16 Oct 2012 (Sydney, NSW, Australia)

Euromoney Training presents, 'Mining Project Finance', intended for those who have an interest in the area of project financing in the Mining industry and identifying the opportunities and potential pitfalls with this commodity-based project finance area. This is Module Four of the 2nd Annual Asia Project Finance Academy. Modules are bookable separately or you can attend the whole Academy saving US$6,850

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19 Oct 2012 (Sydney, NSW, Australia)

Euromoney Training presents, 'Building Project Finance Models'. This is Module Six of the 2nd Annual Asia Project Finance Academy. Modules are bookable separately or you can attend the whole Academy saving US$6,850

3rd APAC Project Finance Academy

8-19 Oct 2012 (Sydney, NSW, Australia)

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17-18 Oct 2012 (Sydney, NSW, Australia)

A 2-day workshop on the application of Project Finance to Public- Private Programmes (PPPs) with a special session on which PPP programmes work and which do not. This is Module Five of the 2nd Annual Asia Project Finance Academy. Modules are bookable separately or you can attend the whole Academy saving US$6,850

Advanced Project Finance Workshop

8-10 Oct 2012 (Sydney, Australia)

Intended for those who have an interest in the risk management and structuring aspects of Project Finance projects, it focuses on the core skills of risk analysis and structuring, with a special emphasis on political risk.

Energy Project Finance

11-12 Oct 2012 (Sydney, Australia)

This course examines advanced techniques relevant to the current stressed global financial markets and provides you with up-to-date sectors skills at financing energy projects.