Financing offshore oil platforms: Empirical analysis and suggestions for the Turkish market

Abstract

Offshore oil production constitutes roughly 30% of total oil production. Developing countries such as Turkey may benefit from offshore oil production especially seeing that the platforms can be locally produced and these countries have considerable amount of current account deficit. Much of this deficit is related to oil imports. These countries, however, need external financing to invest in this field. The ability to obtain these funds require the knowledge on financing alternatives and mitigating the risks. The funds may come from World Bank, international supplier Ex-Im related, capital markets equity or project/corporate bonds, asset finance and leasing, private equity, project finance or corporate finance with the involvement of financial, legal and technical consultancy. The major risks are safety and environmental issues, political risks, currency risks and the price of oil. The research in this study is the relationship between the price of oil and stock market value of major offshore oil operators. The variables used are British Petroleum pic, Royal Dutch Shell RDS-A, Total SA and United States Oil Fund (USO). The methodology used in the study includes Augmented Dickey Fuller and Philips Perron unit root tests, Vector Autocorrelation and Cointegration. The results indicate that there is no long term relationship between price of oil and stock market performance of operators in the research period between 10 April 2006 and 16 June 2015. © Medwell Journals, 2016.