Ans)
PDVSA should finance the development of the Orinoco basin by going in for project financial support. The reasons for the same can be enlisted as:
-PDVSA is non simply looking for this one deal, but intends to follow this up with many more such similar deals. This deal is merely meant to act as a benchmark.
-Since PDVSA has further growth on its mind, it is imperative that it maintains its cash and debt capabilities to address future requirements and uncertainties.
-Especially in light of being a part of a mellow seek country, project financing could help better diffuse the risk.
Costs associated with using project finance are:
-influx of higher funds could result in a negative carry. This could lead to interest drain, leading to a decrease in gain.
Benefits associated with using project finance are:
- visualize finance is less risky for partners in the JV than simply financing it themselves.
-Protects the companies from bankruptcy risks since they have limited responsibility.
-Protects companies debt capacity for future requirements.
-Project is legally independent.
-Investments are not short term.
-Probability of retrieve a higher investment grade that overlooks the country risk is more.
2) What are Petrozuatas three or four approximately important operating risks? How does the deal structure address these risks? Who would strike these risks if the project was financed internally by PDVSA instead?
Ans)
The operating risks could be listed as:
-Political Risk associated with the Venezuelan government and its excitableness in regards to tax rates or royalties.
-Exchange valuate fluctuation could be the other risk associated with this project. A vapourisable rate in the unstable economy could pose issues.
- irritability of Oil prices with a range of $8.14 to $37once again poses a...If you want to get a full essay, order it on our website: Ordercustompaper.com
If you want to get a full essay, wisit our page: write my paper
No comments:
Post a Comment