FBN Capital eyes $4b oil, gas financing

FBN Capital28 April 2014, Lagos – FBN Capital would be involved in oil and gas projects financing deals worth $4 billion this year alone, with a chunk of the funds going into assets divested by the international oil companies (IOCs), which are being acquired by the firms, it was learnt.

Firms, including Aiteo, Taleveras, Transcorp, Nestoil, and Dangote, are said to be jostling for the acquisition oil mining leases (OMLs) 18, 24, 25, and 29, divested by Shell Petroleum Development Company (SPDC), and because some of the oil blocks’ reserves are high, the price tags are also high, requiring huge facility sourcing from banks by the bidders.

The Managing Director/Chief Executive Officer, FBN Capital Limited, Kayode Akinkugbe, told The Nation that advancement of loans to the firms by financial institutions is increasing unlike in the past when banks shied away from financing projects in the industry, adding that this year, the company would be involved in some of the divestments that are being done by the IOCs. “We will be fulfilling our role to arrange financing particularly for indigenous oil and gas companies and also the international ones,” he added.

Though he didn’t disclose the oil firms that would benefit from the arrangement, Akinkugbe noted that firms, such as Oando, Sahara Group and Forte Oil, have benefited from FBN Capital’s project financing deals. About a week ago, Accugas signed a $170 million acquisition deal with some banks, which FBN Capital was the lead arranger.

Akinkugbe said: “We have done transactions for Oando, Accugas, Sahara Group, Forte Oil just to name a few, just last year in the oil gas space alone. It is an area that is strategically important to Nigeria and I think any financial institution that operates in this environment must also have strong capability in that sector. So we made concerted effort to develop our knowledge and expertise of the oil and gas sector so we can support some of these companies that I mentioned.”

Previously indigenous oil and gas operators complain that banks don’t finance their projects but that situation has changed, which Akinkugbe confirmed noting reasons for change.

He said: “I think they (banks) are developing their own expertise to be able to better access the risks in the oil and gas sector. The banks themselves are developing as the industry is developing. To do a successful deal, you need a counterparty that also is well prepared and that also understands the nature of financing required.”


– The Nation

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