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Financing the Russian Oil and Gas Sector

Financing the Russian Oil and Gas Sector The development of any economy takes its momentum from the implementation of investment projects which ensure reproduction on a progressively increasing scale, add new values, create new jobs and spawn new producer and consumer demand. The financial sustainability of such projects, i.e. their ability to attract the required cash resources on acceptable/competitive terms and to make for such returns on these inputs as match the risks involved, is a key factor not only for the efficient implementation of the undertakings concerned but also for their very possibility. This is especially true of investment projects in the fuel and energy sector, considering the latter's unavoidably high capital/output ratio, long lead times and a greater diversity of risks compared with other sectors. The purpose of this article is to show how multilateral international law instruments, in particular the Energy Charter Treaty (Ec:T) and various related arrangements, can lower project-financing risks and the costs of raising external capital. The analysis below basically consists of five sections. Section I looks at the evolution of mechanisms employed in the world to finance oil and gas projects as such projects themselves get more challenging-with the deterioration of natural conditions on deposits under development-and as http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of World Investment and Trade Brill

Financing the Russian Oil and Gas Sector

Journal of World Investment and Trade , Volume 4 (6): 21 – Jan 1, 2003

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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1660-7112
eISSN
2211-9000
DOI
10.1163/221190003X00020
Publisher site
See Article on Publisher Site

Abstract

The development of any economy takes its momentum from the implementation of investment projects which ensure reproduction on a progressively increasing scale, add new values, create new jobs and spawn new producer and consumer demand. The financial sustainability of such projects, i.e. their ability to attract the required cash resources on acceptable/competitive terms and to make for such returns on these inputs as match the risks involved, is a key factor not only for the efficient implementation of the undertakings concerned but also for their very possibility. This is especially true of investment projects in the fuel and energy sector, considering the latter's unavoidably high capital/output ratio, long lead times and a greater diversity of risks compared with other sectors. The purpose of this article is to show how multilateral international law instruments, in particular the Energy Charter Treaty (Ec:T) and various related arrangements, can lower project-financing risks and the costs of raising external capital. The analysis below basically consists of five sections. Section I looks at the evolution of mechanisms employed in the world to finance oil and gas projects as such projects themselves get more challenging-with the deterioration of natural conditions on deposits under development-and as

Journal

Journal of World Investment and TradeBrill

Published: Jan 1, 2003

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