Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil...
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Transcript of Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil...
![Page 1: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/1.jpg)
Introducing the PetroTrust
A New Approach to Energy Investment
Chris Cook – International Oil Refining ConferenceTeheran
October 2008
![Page 2: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/2.jpg)
We live in Interesting Times…..
![Page 3: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/3.jpg)
….some say, “the end of the financial system as we know it”
![Page 4: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/4.jpg)
If the global system of credit creation is indeed in terminal decline……
![Page 5: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/5.jpg)
….might the solution lie in a new approach to investment?
![Page 6: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/6.jpg)
Iran needs massive investment in energy infrastructure…..
![Page 7: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/7.jpg)
....but the Credit Crunch has made worse the existing problem of US sanctions
![Page 8: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/8.jpg)
The PetroTrust may help Iran in obtaining that investment….
![Page 9: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/9.jpg)
…and the “Trust” approach could allow Iran to lead the creation of a viable alternative….
![Page 10: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/10.jpg)
….to the “Western” model of financial capital.
![Page 11: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/11.jpg)
How did the Banking system go wrong?
![Page 12: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/12.jpg)
A Bank is a Credit Intermediary – or “Middleman”
BankBorrower Depositor
£ £
![Page 13: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/13.jpg)
But it does not lend pre-existing money….
![Page 14: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/14.jpg)
….it creates new money as interest–bearing credit….
![Page 15: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/15.jpg)
….which is then deposited back into the system
![Page 16: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/16.jpg)
Now, if you think about it, a bank’s true economic function….
![Page 17: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/17.jpg)
…is to guarantee that the borrowers’ credit is good…
![Page 18: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/18.jpg)
Interest is charged for the use of the guarantee
Bank
Interest
Borrowers
![Page 19: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/19.jpg)
..from which Interest is paid to Depositors..
Bank
Interest
Borrowers
Depositors
Interest
![Page 20: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/20.jpg)
..Default and Operating costs deducted...
Bank
Interest
Borrowers
Depositors
InterestCosts
![Page 21: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/21.jpg)
..and a profit to Investors normally results
Bank
Interest
Borrowers
Depositors
InterestCosts
InvestorsInvestors
![Page 22: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/22.jpg)
So Banks create a Pyramid of Credit, on a base of Equity
Bank Credit
BankEquity
![Page 23: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/23.jpg)
Demand for Credit has been so high…
![Page 24: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/24.jpg)
….that Banks began to “outsource” their guarantee to rid themselves of risk.
![Page 25: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/25.jpg)
…and thus allow Equity to support more credit creation
![Page 26: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/26.jpg)
Banks outsourced risk totally – through “securitising” debt and sale to investors….
![Page 27: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/27.jpg)
…temporarily – with “Credit Derivatives” (a time-limited guarantee)….
![Page 28: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/28.jpg)
…and partially – using credit insurance from insurers such as AIG
![Page 29: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/29.jpg)
The Result is a bigger Credit Pyramid than Banks alone could sustain…
Investor Equity
Credit
BankEquity
![Page 30: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/30.jpg)
…and an opaque “shadow banking system” of Investors holding “sliced and diced” risk…
Investor Equity
Credit
BankEquity
![Page 31: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/31.jpg)
This extended Pyramid of Credit funded the “Mother of all Bubbles” in US property prices….
![Page 32: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/32.jpg)
…and servicing this credit finally exceeded the financial capacity of the US population.
![Page 33: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/33.jpg)
In August 2007, the Bubble started to deflate and attention turned at last to defaults …
![Page 34: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/34.jpg)
..but by now no-one knew where the Risk lay…
Investor Equity
Credit
BankEquity
![Page 35: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/35.jpg)
Banks started to think, “if this is what our balance sheet looks like…..”
![Page 36: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/36.jpg)
“…what does everyone else’s look like…..?”
![Page 37: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/37.jpg)
The problem is not shortage of money - liquidity – Central Banks can handle that….
![Page 38: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/38.jpg)
…..it is shortage of Equity - a Solvency problem – which Central Banks cannot handle…..
![Page 39: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/39.jpg)
Bank Equity is being eaten away by defaults….
![Page 40: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/40.jpg)
…Investors are licking their wounds…
![Page 41: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/41.jpg)
…and will risk no more of their Equity…
![Page 42: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/42.jpg)
The Result?
Equity
Credit
![Page 43: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/43.jpg)
So, Credit is becoming both scarce and expensive….
![Page 44: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/44.jpg)
…Central Banks are irrelevant….
![Page 45: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/45.jpg)
…and further defaults will destroy yet more Bank Equity…..
![Page 46: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/46.jpg)
….and drain money out of the system in a “deflationary spiral”....
![Page 47: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/47.jpg)
….leading inevitably to a Depression....
![Page 48: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/48.jpg)
So much for the Credit Crunch problem
![Page 49: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/49.jpg)
Clearly the solution cannot lie in creating more credit
![Page 50: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/50.jpg)
So we will take a new approach to “Equity” investment instead.
![Page 51: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/51.jpg)
Conventional Equity consists of shares in a Limited Company or “Corporation”….
![Page 52: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/52.jpg)
Ownership by a Corporation is what makes the “Private Sector” Private
![Page 53: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/53.jpg)
While the Corporation may be conventional, it is not the only enterprise model there is
![Page 54: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/54.jpg)
While all eyes have been on Credit innovation…
![Page 55: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/55.jpg)
…”Asset-based” finance has been developing “under the radar”….
![Page 56: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/56.jpg)
Canadian “Income Trusts” use a Trust law framework to “unitise” gross Corporate
revenues….
![Page 57: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/57.jpg)
Income Trust
Income Trust
CorporationCorporation
GrossRevenues
UnitInvestors
UnitInvestors
%
%
Units
Costs
Dividends?
![Page 58: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/58.jpg)
Units are sold to risk averse investors such as pension funds…
![Page 59: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/59.jpg)
…who consider investment less risky if they access corporate revenues…
![Page 60: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/60.jpg)
….before the management does….
![Page 61: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/61.jpg)
We are also seeing new asset classes such as Exchange Traded Funds (“ETF’s”)….
![Page 62: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/62.jpg)
…“Real Estate Investment Trusts” (“REIT’s”)…
![Page 63: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/63.jpg)
…”Hedge Funds” constituted as “Limited Partnerships”…
![Page 64: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/64.jpg)
…and of course….”Sukuks”
![Page 65: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/65.jpg)
In 2001 the UK introduced the Limited Liability Partnership (“LLP”) – not in fact, a “Partnership”
![Page 66: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/66.jpg)
…but simply an infinitely flexible corporate form – an “Open” Corporate
![Page 67: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/67.jpg)
If productive assets are held by a “Custodian”..
AssetsAssets CustodianCustodianOwnership
![Page 68: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/68.jpg)
…Investors put in Financial Capital in money, or “money’s worth”…
AssetsAssets
Investors
CustodianOwnership
Financial Capital
![Page 69: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/69.jpg)
…Managers put in Human Capital of time, expertise and experience....
AssetsAssets
Investors ManagersManagers
CustodianOwnership
HumanCapital
Financial Capital
![Page 70: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/70.jpg)
…and Users pay for the use of this Capital…
AssetsAssets
Investors
UsersUsers
Payment
ManagersManagers
% %
Custodian
Use
![Page 71: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/71.jpg)
…the result is a “Capital Partnership”
AssetsAssets
Investors
UsersUsers
ManagersManagers
Custodian
![Page 72: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/72.jpg)
A “Capital Partnership” enables new forms of Equity…
![Page 73: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/73.jpg)
(a) Equity Share Units - proportional (%age) ”n’ths” such as billionths.....
![Page 74: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/74.jpg)
…..which may be bought and sold, but never redeemed, because there must always be 100%
![Page 75: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/75.jpg)
(b) Redeemable Units – eg Kilo Watt Hours; rights to occupy 1 hectare of land for a year….
![Page 76: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/76.jpg)
….or barrels of oil and litres of gasoline
![Page 77: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/77.jpg)
Such Units have a value in exchange, but carry no rights to production or income over time…
![Page 78: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/78.jpg)
They hold their value because they are asset-based on value provided by the issuer …
![Page 79: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/79.jpg)
….rather than being deficit-based upon a claim over value issued by a Bank
![Page 80: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/80.jpg)
Let’s have a look at how a Capital Partnership might work as a “PetroTrust”.
![Page 81: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/81.jpg)
Example: imagine that a new refinery is needed in the Caspian region…..
![Page 82: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/82.jpg)
We create a Refinery Trust
Refinery
Investors
Oil Suppliers
Managers
CustodianCustodian
Units % of Units
% of Units
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For as long as they supply oil or management services members receive a %age of production
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Investors provide development Capital by purchasing redeemable Units
![Page 85: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/85.jpg)
Contractors may invest equipment & materials but must invest their agreed profit margin
![Page 86: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/86.jpg)
Contractors’ costs are covered by selling Units from the “Production Pool” to financial investors
![Page 87: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/87.jpg)
Example: imagine that a gas liquefaction plant is necessary for gas currently being flared
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We create a Gas Trust
Liquefaction PlantLiquefaction Plant
Investors
Gas Pool
Managers
Custodian
Units % of Units
Units
![Page 89: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/89.jpg)
Units are redeemable in natural gas or LNG
![Page 90: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/90.jpg)
An “Equity share” of production goes to the Managing member
![Page 91: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/91.jpg)
Contractors receive money, Units or both…
![Page 92: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/92.jpg)
Investors purchase Units of the “Gas Pool” of future production
![Page 93: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/93.jpg)
The PetroTrust ensures that Iranian assets remain in Iranian ownership and control.
![Page 94: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/94.jpg)
…and the financial effect is that Units of production may be sold at a fixed price.…
![Page 95: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/95.jpg)
…..resulting in Sharia’h compliant Interest-free investment.
![Page 96: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/96.jpg)
If prices rise, Investors gain and Iran foregoes part of the profit…
![Page 97: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/97.jpg)
..if prices fall, Iran is protected, but Investors lose – but even so, gain by lower energy costs
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The outcome is to raise finance by Unitising future production, simply and flexibly…
![Page 99: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/99.jpg)
…through new forms of “Co-ownership” Equity within a Capital Partnership framework…
![Page 100: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/100.jpg)
…and the Pyramid of Risk is very different….
Management Equity
Investor Units
National Equity
![Page 101: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/101.jpg)
Issues...Legal framework; Regulation; Taxation; Sharia’h Compliance; Market Infrastructure
![Page 102: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/102.jpg)
PetroTrust potential is immense….
![Page 103: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/103.jpg)
Iran already uses cross-border frameworks .eg NICO based in Jersey, operates in Switzerland..
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PetroTrust framework allows flexible and simpler new variations of “Buyback” contracts
![Page 105: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/105.jpg)
PetroTrust creates a simple new framework for cross-border collaboration…
![Page 106: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/106.jpg)
eg Iranian Oil Company (UK) Ltd is a signatory to the North Sea MasterDeed framework….
![Page 107: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/107.jpg)
….which is based on Trust, not partnership, law and is costly, complex and cumbersome
![Page 108: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/108.jpg)
But a Caspian Master Partnership….
Assets and InfrastructureAssets and
Infrastructure
Investors
CaspianNations
Managers
Custodian
Units % of Units
Units
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….creates a simple new framework for Caspian “Pools” of oil and gas production…
![Page 110: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/110.jpg)
….which may be “Unitised” to enable necessary Caspian investment for all Caspian nations.
![Page 111: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/111.jpg)
The PetroTrust enables a Carbon currency based upon the intrinsic value of energy…
![Page 112: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/112.jpg)
..rather than a market in value-less Units of CO2 emissions, imposed by governments …
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….and designed by the same people who brought us the Credit Crunch….
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A trader’s metaphor illustrates the fundamental uselessness of a deficit-based carbon currency…
![Page 115: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/115.jpg)
“If you want to keep a cow healthy, you don’t regulate what comes out of it……
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“……you regulate what goes in….”
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I believe that conditions are now right for a Carbon Currency, and “Clearing Union”
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Next Steps
![Page 119: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/119.jpg)
“You don’t know what you’ve got ‘til it’s gone”
![Page 120: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/120.jpg)
And…you don’t know what you haven’t got ‘til you see it….
![Page 121: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/121.jpg)
I recommend that Iran….identifies and removes any domestic obstacles to “Unitisation”
![Page 122: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/122.jpg)
…identifies suitable schemes for “Proof of Concept” Trusts….
![Page 123: Introducing the PetroTrust A New Approach to Energy Investment Chris Cook – International Oil Refining Conference Teheran October 2008.](https://reader036.fdocuments.in/reader036/viewer/2022062515/56649ce55503460f949b2771/html5/thumbnails/123.jpg)
….and initiates a global dialogue towards a new global financial settlement – “Bretton Woods II”.
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Thank You,