Chad Cameroon Large Group

Chad Cameroon Large Group - The Chad-Cameroon Petroleum...

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The Chad-Cameroon Petroleum Development and Pipeline Project Professor Doug Cerf Donald Bren Graduate School of Environmental Science and Management Environmental Risk Management (ESM 286) Winter 2008
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Printed on recycled paper-actually better, not printed at all What has been accomplished by the Chad Cameroon Project? Very interesting consortium of parties to accomplish Economic development in a developing country Shared financial returns Sharing of risks Poverty alleviation Project development with concern for sustainable development Partnership of Governments, Private Corporations, Private Banks and The World Bank How much risk is acceptable in economic development situations that have severe environmental and social issues?
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Printed on recycled paper-actually better, not printed at all How did the financing differ? Review Corporate Structure in Exhibit 3a Review Sources / Uses of Cash Exhibit 3b Field System Oil wells and drilling equipment Export System Pipeline and off-shore loading system
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Printed on recycled paper-actually better, not printed at all Corporate Finance for the Field System No debt all equity 3 sponsors (upstream consortium) Exxon/Mobil exposure 608m 40% of $1,521m Market value of equity $280b High discretion over cash flows Monitoring is done internally As opposed to the external monitoring similar to the equator principles
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Printed on recycled paper-actually better, not printed at all Equator Principles A new voluntary framework to guide “project financing” decisions Endorsed in 2003 by ten leading banks Non government organizations (NGO) wanted financers of large projects to take legal and moral responsibility for the social and environmental impact on local communities and host nations caused by the projects that they financed
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Printed on recycled paper-actually better, not printed at all Project Finance Project finance involves the use of limited or fully non-recourse debt by a corporate partner (the sponsor or sponsors) to finance investment in and ownership of a legally independent, single purpose industrial asset usually with a limited life.
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Printed on recycled paper-actually better, not printed at all Key elements of the project finance agreement Key elements: An investment in an industrial asset An organizational decision to create a new, legally- independent entity Financing decision involving non-recourse debt The project financing arrangement is limited non-recourse debt because it provides a guarantee for debt repayment through completion After completion there is no recourse to sponsors The debt is an obligation of the project companies, Techad (TOTCO) and Cameroon (COTCO) pipeline projects Repayment is a function of project cash flows
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Printed on recycled paper-actually better, not printed at all Key elements of the project finance agreement By creating a legally-independent entity the
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This note was uploaded on 08/06/2008 for the course ESM 286 taught by Professor Cerf during the Winter '08 term at UCSB.

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Chad Cameroon Large Group - The Chad-Cameroon Petroleum...

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