DAMMAM: Energy investment has recovered after the financial crisis, although banks may not resume significant funding yet, according to a top official of the Arab Petroleum Investments Corporation (Apicorp), a multilateral bank assisting the development of the hydrocarbon sector of the members of the Organization of Arab Petroleum Exporting Countries (OAPEC) through project loans, trade finance, and direct equity investments. Nicolas Thevenot, Apicorp executive vice president for project and trade finance, addressing last Tuesday the GCC Forum on Financing Industrial Projects, which was jointly organized by Asharqia Chamber and the Federation of GCC Chambers of Commerce and Industry (FGCC Chambers), said financing industrial projects after the global financial downturn is significantly improving. He cautioned, however, investors and project proponents to reassess their investment strategies by way of shelving projects that are no longer viable and scaling down projects portfolios. “Although there is that recovery in energy investment, the best option is the continuity in the reduction of risks,” Thevenot said. A study by Apicorp on the cost of an energy project showed that the average energy project that increased nearly three times in five years - from $720 million in the 2004-2008 to $2,040 million in the 2009-2013 - is projected to decline to $1,710 million in the current 2010-2014 period. According to Thevenot, one important investment criteria Gulf countries must follow is the integration of region's energy projects. He said this direction could be pursued by engaging in new projects, such as projects that provide new technology and those related to maintenance and services. Thevenot said the GCC countries should be encouraged to allocate internally more of the assets invested abroad, and direct more their investment to the petroleum and energy industries. Apicorp said although there are varying average equity-debt ratio in the energy sector, such 35:65 in the refining and petrochemical sectors, 40:60 in gas-based downstream projects, and 30:70 in power and water generation, it is perceived that the resulting weighted average capital structure for the whole oil and gas sectors should likely to be 55 percent equity and 45 percent debt at least for the period 2010-2014. The equity-debt ratio before the financial crisis was of 50:50.
