The concentration of assets in hydrocarbon financing is critical in the determination and elimination of risk associated with this form of financing. It is the purpose of this paper to present a method to define this risk, to measure its degree of severity and to illustrate methods of diminishing this risk to the lender and the borrower.

The risk associated with concentration of assets is that the increasing loss of the major asset will result in a financially untenable situation for the lender and borrower. Therefore, it is necessary to recognize this concentration, measure its magnitude and take steps to prevent its creating a problem for the lender and the borrower.

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