A solution for financing the upstream oil and gas industry using the project fund

Financing is one of the most important challenges in launching new projects. Different methods of financing have different effects on project performance due to the variety of market and its risk and return. One of the new methods of financing projects is the creation of a project fund through the capital market, which investors are the final owner of the project, so participate in the economic benefits of the project. As regards the projects of the upstream oil and gas sector are very capital-intensive, in case of this financing method in the stock market, the micro-investor will also invest in the project, so in macro perspective, the economic fluctuation of liquidity is partially controlled. This paper examines the use of project fund finance in the upstream oil and gas industry. In this study, the requirements of the mentioned industry including cost, time and risk have been studied, using descriptive method and libraries. The pillars of the fund and their tasks are listed, as well as the challenges of this method, mainly including the ownership of oil and gas outfit and equipment at the end of the construction period and the transfer tax are reviewed and its solutions are also proposed.