Features of project financing in the oil and gas industry

Investing in the oil and gas sector is by nature large and long-term in nature. The increase in the profits of Russian oil and gas companies is directly affected by the decrease in ruble costs, which leads to the growth of both liquid funds and the overall competitiveness of the project. The distinctive features of financing projects in the oil and gas sector are that investment projects have a wide range of risks that have a big impact on the key economic indicators of the investment transaction. In addition, these projects directly depend on the current global energy situation, which affects their economic efficiency. The main advantage of project financing is the ability to concentrate considerable money resources on the solution of a specific economic problem, and localize the project risks on the project company. It is created specifically for the implementation of a particular project, is responsible for its implementation and usually does not have a financial history or property for collateral. Responsibility and risks are distributed among the project participants and are regulated by a set of contracts and agreements. Project financing is one of the priority tools to stimulate the country’s economic growth around the world, which allows the implementation of large-scale and capital-intensive projects, providing favorable credit conditions with insufficient sponsor solvency. The project is considered the most competitive of all types of financing of investment projects, as it attracts a significant share of investments for realization of capital-intensive projects with effective redistribution of risks between all subjects of the transaction. Project finance is compatible with strategically important segments of the Russian economy, such as energy, telecommunications, construction, mining, and federal road infrastructure.