July 29, 2019
As the global demand for power continues to outstrip supply in many nations across the world, existing means of delivering power are insufficient. Driven by soaring energy requirements, lower gas prices, new technology, and cost-effective distribution, gas to power (G2P) has the potential to deliver cleaner, more flexible energy solutions to meet this global demand.
In recent years, major sponsors including oil and gas companies and power developers have announced their intention to actively pursue G2P projects, and a number of governments have announced planned programs to encourage the development of G2P in their countries. Despite the emergence of G2P as a source of additional, reliable, and greener power, the complex cross-border nature of G2P projects – often involving state participants and private entities operating in developing and mature economies – requires a detailed understanding of the specific structural and financial requirements of each project and location.
To help sponsors, financial institutions, multilaterals, and other market participants navigate the unique challenges posed by G2P projects, Latham & Watkins has produced a video series covering the market forces driving the sector. The four-part series covers:
- An introduction to the broad concept of G2P
- The drivers behind recent interest in G2P projects
- Financing considerations for global projects
- Key factors sponsors and lenders should consider when structuring projects
“G2P is an attractive alternative solution to meeting global power demand, and sponsors and governments are increasingly pursuing and encouraging the development of G2P projects, particularly in regions where domestic fuel reserves are diminishing,” said Matthew Brown, a project finance partner in Latham & Watkins’ London office. “In relative terms, G2P is still in its infancy, but as successful financial templates and solutions continue to be developed, we expect G2P projects to play an important role in the global power generation mix for years to come.”
“The political and economic fundamentals are aligned and converging fast. Of all the fossil fuels gas is the cleanest and can meet the need for base load power that renewables currently can’t,” added John Balsdon, a project finance partner in Latham & Watkins’ London office. “The gas price continues to fall, as more large discoveries are made and advances in technology drive down costs. We’re rapidly approaching the tipping point for G2P, and once it is reached, the number of projects will grow exponentially.”
Latham & Watkins’ in-depth knowledge of the oil & gas and power industries comes from decades advising the sector’s leading developers, sponsors, financing entities, governments and export credit agencies. This extends across all elements of the up-, mid- and down-stream oil & gas value chain and spans the entire power generation mix, from innovative G2P projects to fossil fired power generation, renewable power, nuclear power generation, and other electric power technologies.