International Finance Corporation and Flare Reduction

Transcription

1 International Finance Corporation and Flare Reduction Opportunities for GHG Mitigation through Private Sector Oil & Gas Investments in Infrastructure and Cleantech 1

2 IFC is committed to reducing GHG emissions in the projects where it invests Through our targets for investing in Climate friendly projects: Goal to reach 20% of total IFC commitment volumes over next 2 years Bringing Climate Change into the IFC Development Goals (IDG): In process of introducing an IDG on Greenhouse Gas emission reductions Introducing robust carbon footprinting: Carbon Emissions Estimator Tool (CEET) is the first step in calculating avoided and total emissions for projects 2

3 Reduction in associated gas emissions is component of O&G climate strategy through: 1. Encouraging adoption of GHG reduction best practice in O&G development projects: i. Focus on improved operational practices and process efficiency 2. Investing in technology upgrades: i. Low-bleed pneumatic controllers ii. Gas dehydration using a flash tank separator or electric pump iii. Centrifugal compressor oil seals vent gas capture iv. Leak detection and repair 3. Identifying standalone projects to utilize stranded/flared gas i. Mini Gas to Liquid (mini-gtl) projects ii. Joule Thompson devices to reduce flared gas iii. Micro turbine generators 3

4 IFC sees investment potential in flare reduction through traditional and early stage business lines Opportunities through traditional channel: Upstream Oil & Gas sector debt and equity lines - Traditional project and corporate finance led by the institution s Infrastructure department Opportunities through early stage Cleantech investments: - Equity investments in innovative climatefriendly technology led by the Climate Business Group s Cleantech Practice 4

5 Traditional Channel: Key O&G Investment Criteria Shareholders/ Partners Financial Strength, Sufficient investment stake from project sponsors Ability to access/raise additional financing if/when needed No connection to public offices and minimal government ownership Strategy/ Management Bankable business plan and strategy aligned with shareholder interests Experience and Track Record Socio-Political, Legal & Fiscal Environment Assets Operator & Marketing /Sales Stable socio-political environment Strong and appropriate legal structure Independent regulation Sustainable fiscal regime Social License to Operate Size/ Reserves Certainty and complexity Diversified portfolio Operator experienced in relevant technology and high reputation Capacity to market and sell production Appropriate sales arrangements price and volume, particularly for gas 5

6 Traditional Channel: O&G Financial Products Equity Corporate/UJV Typically 5-15% shareholding Long-term investor, typically 6-8 year holding period Not just financial investor, adding to shareholder value Usually no seat on board Mezzanine/Quasi Equity Subordinated loans Subordinated loans Income participating Income loans participating loans Convertibles Convertibles Other hybrid instruments Other hybrid instruments Senior Debt Senior Debt: Project Finance or Corporate Finance Long maturities: up to 15 years, appropriate grace periods Range of security packages suited to project/country Mobilization of funds from other lenders and investors - through IFC s B loan program 6

7 Traditional Channel: Investment Parameters Project Type Greenfield, total cost less than $50 million Greenfield, total cost more than $50 million Expansion or rehabilitation Greenfield, expansion, rehabilitation IFC Investment Up to 35% of project cost for IFC s account Up to 25% of project cost for IFC s account Up to 50% of project cost IFC can mobilize 100% of debt through bank syndication Umbrella for participants in IFC s syndication program: IFC lender of record, immunity from taxation and provisioning requirements. IFC s total financing (for its own account) must be less than 25% of total company capitalization. IFC does not manage or have largest stake. 7

8 Early Stage Cleantech: Key Investment Criteria Shareholders/ Partners Private companies without significant government ownership Geography Investment in developing countries with proceeds in developing countries Maturity of Technology CBGT does not invest in R&D stage companies, nor seek significant technology risk proven technology only Stage of Growth Post-revenue innovation-driven Cleantech companies that have new and transferable technologies 8

9 Early Stage Cleantech: Investment Parameters CBGT invests in growth stage Cleantech companies in emerging markets Typical investment size of US$3-30 million Longer term perspective than that of traditional private equity of venture capital firms Capacity to provide follow-on equity, mezzanine and senior debt financing as profitable companies grow Ability to assist portfolio companies with strategic partnerships and international expansion Portfolio business must have proven technology, but CBGT offers to brings the tech to new markets (typically CBGT financing comes in as a Series B+) 9

10 Summary IFC is keen to engage on associated gas utilization and flare reduction, actively exploring opportunities Technology for gas flare reduction is important to us as a potentially bankable means of mitigating GHG s in O&G We have the resource s and products to invest in the technology itself (CBGT) and projects that employ it (IFC Upstream O&G) We are actively exploring opportunities and receptive to ideas on how we can push and pursue bankable investments 10

11 IFC Upstream Oil & Gas: Marcene Broadwater, Global Head, Climate Change and Sustainability mbroadwater@ifc.org Lance Crist Global Head, Oil and Gas lcrist@ifc.org Climate Business Group Cleantech: Nikunj Jinsi Head, Cleantech Investments njinsi@ifc.org Sean Petersen, Investment Officer spetersen@ifc.org 11