Financing Oil and Gas Projects in Developing Countries - Finance & Development - June 1996 - Hossein Razavi

HE BIGGEST increases in demand for oil and gas are occurring in the developing world, which is also where most of the world’s proven oil and gas reserves are located. International energy companies—investors, equipment suppliers, contractors, and consulting firms—are therefore shifting their attention from Europe and North America to developing countries, which are likely to offer more business opportunities in the oil and gas sector in the future. Although many new projects are being formulated, most do not take off because of the difficulties of securing sufficient financing. Project sponsors are being forced to design more flexible and innovative financing packages involving a range of partners from both the public and private sectors. Still, the commercial and political risks often discourage potential partners. In an effort to facilitate the flow of funds, the World Bank recently revised its strategy in the oil and gas sector, giving greater emphasis to helping governments and private companies manage and mitigate project risks.