GCC banks looking to fund oil & gas investments (page 2 of 2)

To secure a more sizeable share of the oil and gas funding market, regional banks should focus on both improving Islamic offerings as well as targeting conventional lending. In both regards key success factors include:

Shari'a compliance boards
Clarify the currently prevailing legal and regulatory uncertainties: the creation of Shari'a compliance boards by key players, and the proactive involvement of theologians in affirming compliance standards, should be sought.

Innovative structured products
Devise innovative structured products that are not offered by large international players: including increased use of securitisation techniques, and arranging more complex sukuks , or "Islamic bonds."

Islamic tools as subsets of conventional products
Pursue further ways to introduce Islamic finance products as self-contained tranches within larger conventional project finance: as is the case with Dolphin Energy.

Sector specialization
Target sector specialities which will allow replication and achieve cost-effective instruments: such as in the LNG market; funding downstream refining facilities; and funding exploration and production of oil fields in areas such as Yemen, Libya or Oman.

Alliances with project promoters
Seek long-term alliances with western project promoters and suppliers: this will help influence funding decisions at the beginning of the finance structuring plan.

Partner with smaller oil companies
Partner with smaller oil and gas players seeking entry into the regional oil and gas arena by providing customised funding solutions.

Lobby ECAs
Effectively lobby Western European and US Export Credit Agencies (ECA's ), to cover Islamic-compliant project finance terms, rendering the entire market more attractive to participants.

Leverage shareholders
Leverage relationships with shareholders, often regional high net worth individuals who demand Islamic solutions are often also key political sponsors of medium scale oil and gas projects.

Regional banks are clearly on the scene and advancing along many of these fronts; however, meaningful progress is likely to continue to come from champions willing to aggressively drive the emergence of local banking expertise and define the value of Islamic finance for the oil & gas structured finance.