Offshore Petroleum Development Financing

Offshore hydrocarbon development financing often is "non recourse", because project sponsors wish to mitigate the risks of such large scale, costly, and complex undertakings with their long term exposures to technical, economic, and political uncertainties. Lenders first forecast the economics of the project in light of all risks, and then work with project sponsors to build a suitable financial plan. This plan usually will be negotiated with the host government and other lenders before it is implemented. The entire effort is demanding and costly, and it requires many decisions and tradeoffs to optimize the technical, economic, political, safety and environmental criteria. The enterprise system and market orientation play an important role in motivating and disciplining the financing effort and guiding the decisions and tradeoffs that must be made.