BP Amoco (B): Financing Development of the Caspian Oil Fields Harvard Case Solution & Analysis

British Petroleum and Amoco were the two largest members of the Azerbaijan International Oil Consortium (AIOC), the 11-company consortium, which spends $ 10 billion to develop oil fields in the Caspian Sea. As of March 1999 the AIOC completed a $ 1.9 billion development project, known as the Early Oil. The two companies, however, financed their stake in the project in different ways: BP to use its own funds (traditional, on the balance of corporate finance), while Amoco was one of five AIOC partners, who raised $ 400 million of project financing. After the BP / Amoco merger in December 1998, the managers of the financial group combined firm had to revise the strategy of early financing oil and determine the best way to finance its share of the $ 8 billion in Full Field Development Project. Whether it should use its own funds, project finance, or a mixture of the two? "Hide
by Benjamin C. Esty, Michael Kane Source: Harvard Business School 15 pages. Publication Date: 08 January 2001. Prod. #: 201067-PDF-ENG

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