British Petroleum and Amoco were the two largest members of the Azerbaijan International Oil Consortium (AIOC), a 11-company consortium, which was $ 10 billion to develop oil fields in the Caspian Sea. In March 1999, AIOC had completed a $ 1.9 billion development project known as early Oil. The two companies, however, had financed their shares in this project in different ways: BP uses internal funds (traditional, recognized in the balance sheet corporate finance), while Amoco was one of five AIOC part … Read more »

British Petroleum and Amoco were the two largest members of the Azerbaijan International Oil Consortium (AIOC), a 11-company consortium, which was $ 10 billion to develop oil fields in the Caspian Sea. In March 1999, AIOC had completed a $ 1.9 billion development project known as early Oil. The two companies, however, had financed their shares in this project in different ways: BP uses internal funds (traditional, recognized in the balance sheet corporate finance), while Amoco was one of five partners, the AIOC raised $ 400 million project financing. After the BP / Amoco merger in December 1998, managers had in the combined company financial group to reconsider the premature Oil financing strategy and the best way to their share of the $ 8 billion Full Field Development Project finance. Should it with internal funds, project financing, or a mixture of both?
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from
Benjamin C. Esty,
Michael Kane
Source: Harvard Business School
15 pages.
Release Date: 08 January, 2001. Prod #: 201067-PDF-ENG
BP Amoco (B): Financing Development of the Caspian oil fields HBR case solution

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