New rules for capital formation of refineries

Feb 22, 2002 01:00 AM

Following structural changes in the financing and hydrocarbon processing industries, capital formation for refineries now focuses on deals rather than companies.
"This type of lending goes by a number of names -- structured finance, project finance, non-recourse lending -- but the basic concepts are the same," writes John Jenkins, director of the Jacobs Consultancy. Lenders now look at "the fundamentals of the deal" rather than at corporate balance sheets or historical relationships between banks and corporations.
To make matters worse, petrochemical profits are terrible and investments will soon be required if key companies are to retain market share, Jacobs notes. Also in this issue, America's war on terrorism may signal that Houston's energy assets are in the crosshairs of a future terrorist attack.

EDS Energy Industries Group managing director Dan Vanlandingham grimly notes that two out of five enterprises attacked by terrorists will fail within five years. The solution is an integrated security approach "that considers both preparedness and recovery."
Vanlandingham calls for greater cooperation between the state of Texas and industry, including minimum standards for physical and cyber security for all companies in the state.

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