859 Banking Aspects

Multinational banks and energy companies have always had a strong business relationship due to the large capital needs and worldwide operations of the oil industry. Banks have provided services related to taxation, cash management, and foreign exchange and interest rate risk management. Many energy transactions are not new business, but are merely renewals of funding for existing facilities; these capital requirements are high and provide profitable margins for lending banks. Moreover, relationship banks can offer cross-border financial services, including currency swaps, as part of any commodity-linked transaction.

Because the oil and gas industries are cyclical and have high price volatility, price risk management is an element that will increasingly be incorporated into new energy lending. While many energy companies have not yet utilized these tools due to unfamiliarity, the benefits of customized risk management, including interest rate and currency risk reduction, are becoming apparent. Hedging will, at a minimum, allow the industry more flexibility through better cash flow management.

Banks are becoming more involved in oil and gas swaps as part of overall debt management strategies for their clients. Because of the high transaction costs of writing swaps and options, costs will be embedded in more deals as part of project prefinancings. This is a major area of new business development in the natural gas utilities market in North America. Commodity price swaps will be applied as a tool for other areas of project finance. Electric utilities have high financial and lending needs. As electricity becomes a commodity, more of these deals will include a commodity financing component.

Solar Stirling Engine Basics Explained

Solar Stirling Engine Basics Explained

The solar Stirling engine is progressively becoming a viable alternative to solar panels for its higher efficiency. Stirling engines might be the best way to harvest the power provided by the sun. This is an easy-to-understand explanation of how Stirling engines work, the different types, and why they are more efficient than steam engines.

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