Comprehensive financial model for oil and gas field projects in Qatar
Project finance is essentially the raising of finance for a new project, secured against future revenues rather than an existing corporate balance sheet or other existing assets. The completion of the project, its successful and profitable operations, is therefore the key concern for all lenders and investors. This means that all the elements influencing the costs, revenues and returns from the project are of interest when determining the finance structure. Existing financial models were not designed to cover all these essential aspects. Analysis of the projected cash flows for the deal is therefore essential, from financial close to the end of the concession or plant life, under a range of assumptions. A case study is developed using Qatar's North Field, RasGas (Ras Laffan Liquefied Gas Company) data for this purpose. This is a multi-billion dollar company set up to develop the Gas Extracting and Utilisation Project in Qatar. The projects cannot be financed from the present country revenue, and therefore, external project financing is required. Decisions have to be made regarding the amount to be raised, acceptable securities, criteria for a Target Capital Structure for all new Gas/Oil Extraction/Utilisation Projects and other related decisions. The thesis verifies and validates a unique, innovative, specific, accurate and cost saving Comprehensive Financial Model for the oil and gas industry in Qatar, to facilitate the evaluation of new projects in the future.