Project Financing Using the Forward Oil Curve
Article from: OGEL 4 (2004), in Taxation
Introduction
The paper examines the use by oil companies of the forward oil price curve as a project financing tool. Three features suggest that a review is timely: firstly, the derivatives market, which reflects the oil price curve, has matured in scope and liquidity to the point where it can manage field size risks with comparative ease; secondly, the oil price is at historically high levels; and, thirdly, there is substantial activity in the sector, for which this form of funding may offer a useful supplement to existing sources. A major proposition in the paper is that current upstream oil ...