The LNG supply chain ensures energy independence and economic growth for companies or entire countries that do not have gas transmission systems. During the 1990s and 2000s, project finance (PF), as a special type of debt financing for large projects, acquired strategic importance for the Financing of LNG regasification terminal and that of oil and gas industry and the energy sector in general.
The dynamic development of the global liquefied natural gas (LNG) market, including the growth in the number of Floating Storage Regasification Units (FSRUs), contributes to the further emergence of new energy projects and supports the thermal energy sector through more flexible natural gas delivery schemes.
Financing of LNG regasification terminal projects, as well as other professional services in the field of engineering design, construction and operation of these facilities, are in growing demand.
The range of services of Viola Funding Limited covers all stages of the liquefied natural gas cycle, including engineering and financial solutions for LNG supply, storage and regasification.
Funding for energy projects today focuses mainly on renewable energy in the context of the global phase-out of fossil fuels, but gas remains an important element of energy security and sustainability.
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Project financing for the construction of LNG regasification terminals
The declining cost of LNG requires energy companies to look for more promising investment opportunities. In recent years, companies have been focusing on LNG production and regasification projects in new markets. Countries that refuse or are unable to import natural gas through gas pipelines are of increased interest.
The history of the production of liquefied natural gas for transportation by methane tankers goes back more than half a century, but this technology has been experiencing rapid growth since the 1990s.
Sources of income from regasification terminals include:
1)Purchase of LNG and gas supply via pipelines to end consumers. 2.Regasification of LNG for the production and sale of electricity.3.Selling excess terminal capacity to other companies
Financing the construction of an LNG regasification terminal is an important element in the successful operation of the entire energy chain. There are many options offered here, but it is important for the initiators of the project to identify reliable financial partners who are able to provide sufficient funding on acceptable terms.
Recent trends in the global energy sector require current exporting countries to diversify their natural gas supply systems.
The role of project finance in the oil and gas sector
Using project finance can be cheaper than long-term loans, since the risk associated with a well-considered investment project may be lower than the risk of bankruptcy of the borrowing company. An additional guarantee of the return of funds are long-term contracts with gas consumers, which ensure capacity utilization for 15-20 years or more.
As the Financing of LNG regasification terminal is considered matured and reliable, this condition does not raise concerns among investors.
Project finance attracts many interested sponsors, ranging from oil and gas companies to large consumers looking to secure fuel supplies in the future.
Why has the PF concept become so popular in the oil and gas sector, taking an important place in the LNG chain?
Ownership structure of LNG projects: In terms of ownership of assets and the structure of financing projects related to the production and regasification of liquefied natural gas, experts identify several models used to implement these projects.
On the one hand, project participants can use an integrated approach, when the project combines an LNG regasification terminal and a gas-fired power plant under one roof.
Another approach assumes separate ownership with the establishment of separate SPVs that implement the construction of the LNG terminal and power plant.
For its part, the initiator of the construction of the power plant should assess the possibility of supplying fuel from alternative sources or even transferring equipment to another fuel in case of problems with LNG supplies.
Such schemes are characterized by very complex contractual terms that ensure a delicate balance of interests of the parties.
Project finance risk management: In general, investors are looking for a rational distribution of risks and compliance with contractual obligations by the parties.
Construction risks includes any problems that may arise during engineering design, equipment procurement and facility construction.
Financing LNG terminals: the services of Viola funding
We are ready to meet the most challenging customer requirements for the successful implementation of ambitious energy projects onshore and offshore.
Viola Funding Limited offers project finance for the construction of LNG regasification terminals.
Viola Funding Limited offers international project financing, long-term loans (including financing 100% of the investment costs), refinancing on favorable terms, as well as engineering and consulting.
Our company is always open for negotiations in order to adapt the financing conditions to the business opportunities as much as possible.
We provide flexible long-term financing and qualified financial and legal support.
Our range of services is constantly expanding in line with the expectations of big business to facilitate successful implementation of your LNG projects anywhere in the world.
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