Tomas: Thanks for the detailed update. The development plan that Chevron is pursuing has added two additional layers of complexity to the project development schedule for IPC: (1) project finance, and (2) a joint development. Again, I can confidently say from my own experience that these factors present major hurdles that must be overcome. Although they are not impossible challenges, they will no doubt add time to the overall development schedule.
First, project finance for O&G developments can often take 2-5 years to structure and bring to financial closure, due primarily to the extensive commitments required by the debt-holders (typically more risk averse than equity investors). During the same year that I worked on the aforementioned gas pipeline developments in Malaysia (Oxy Jintan) and Australia (Sagasco), I also worked with a project development team in Dubai on the world's longest subsea pipeline, proposed to run all the way from Qatar to Pakistan. This project was, from the very beginning, structured for project finance (i.e., it was intended to be "ringfenced" and financed 20%/80% equity/debt, with the debt-holders only having recourse to project cash flows, not the owner's balance sheets). That project development team, for a number of reasons, many of which were financial in nature and related directly to the stringent project financing requirements of the debt-holders, has now been scaled back to a one-man operation, and feasibility studies are still ongoing two years later. Project financing with debt simply takes more time than equity financing.
Second, joint developments with projects from different industry sectors inevitably requires intensive government coordination to bring to fruition. Once again, while not impossible, these efforts take time and patience to implement. Again, I'm speaking from experience. I once worked on a joint project development proposal linking a major offshore gas pipeline with an onshore urea/ammonia fertilizer plant in Myanmar. The government interactions required to simply coordinate communications between the two development efforts were quite literally a byzantine maze. That particular project, for a number of reasons, many of which were political in nature, eventually died on the vine. My understanding is that this is the rule rather than the exception for joint-development proposals.
Sorry if I keep raining on the parade here. I'm not intentionally trying to create a ruckus. I'm just calling it the way I see it. If need be, I can simply shut up and go back to lurking. <g>
Good luck!
Razor |
