Before we get into the natural gas and oil finance topic lets provide a background about the industry. The largest players in the non-renewable energy sector are natural gas and crude oil. The financing aspect comes in primarily during the exploration and development of the natural resource into something usable within the market.
The value of oil and gas changes day by day just because of many factors which include world news, import/export, technology and other factors. Crude oil is commonly measured in barrels within the industry and is translated into monetary value. There is the variety of financing options available along with the ability to providing fund transaction. Basically, the entire transaction of oil and gas financing are given below:
• Quick delivery
• Single source lender
• Post close
• Execution certainty
Use of Oil and Gas
The basic question which comes in mind that how the gas and oil can be used? Mostly oil can be used for the following purposes:
• 47% used in gasoline production
• 23% used in diesel fuel and heating oil
• 10% jet fuel
• 3% asphalt
• 4% propane
• 18% petrochemical stock
For the needs of nation’s energy lets take a look at the breakdown of usage:
• 30.3% industrial use
• 26.4% electric power generation
• 21.6%resident use
• 0.1% for vehicles use
• 2.6% for distribution and pipeline
• 5% plant fuel consumption
• 13.9% commercial use
Here are some common characteristics of financing within the oil and gas finance topic:
• Investment debt grade
• Financing ability
• Market capacity
• Capital facility
Investment Debt Grade: There should be two investment grade high debt and low debt. Typically senior notes of long term with the selective floating rates are available.
Financing Ability: There is two type of financing ability which is available in the market that is unsecured and secured. So it depends on you that what kind of financing ability can be used.
Market Capacity: Based on the bank traditional that how the bank can deal with finance.
Capital facility: Everyone needs capital to going on their business there is two kinds of business can be used that is senior capital and junior capital. It is your duty to select the investment capacity.
Process of Sending Gas and Oil: For processing crude oil is taken to a refinery by pipeline, tankers, truck or barges. After completing the processing the natural gas can be transfer from one place to another through the pipeline. The pipeline is important to transport the gas or oil if there is a chance that the pipeline system is not available then new pipeline facility can be constructed like compressor station and pump station.
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