Nigerian banks fund N438bn of oil assets acquisition

16 December 2014, Lagos – Nigeria banks advanced over $2.5 billion, about N437.5 billion, to Indigenous companies for the acquisition of the divested assets of Shell Petroleum Development Company, SPDC, and other oil companies in Nigeria.

Managing Director, Fidelity Bank Plc, Mr. Nnamdi Okonkwo, who stated this at the one-day Marginal Field Sensitization Workshop, organized by the Department of Petroleum Resources, DPR in Lagos, explained that the amount is 83 per cent of the total worth of the assets, valued at $3 billion.

Mobile money, NigeriaAccording to him, the banks participated in the divestment programme of Shell on the onshore asset sales by supporting indigenous companies to provide debt finance for the acquisition and subsequent operations of the fields.

Represented by the Division Head, Oil and Gas Upstream, Abolore Solebo, Okonkwo affirmed that the participation of banks is in line with the Federal Government’s local content initiative, targeted at the oil sector as well as other critical sectors of the economy.

“The Nigeria Content Monitory Board, NCMB, has made a lot of success on the oil service space, but has had a bit of challenge on the E & P. Although, over time they have recorded successes in supporting  the divestment of the IOCs on the onshore asset,” he maintained.

Responding to how oil firms can assess loans from banks, Okonkwo noted that the company had to be fully ready in its financial, legal documents and stipulated requirement, adding that the promoters of the companies must put in place a structure worthy of financing, having all Information of memorandum, setting the management team in place, before approaching the banks.

Moreso, he said that for a company to avert damage that can be incurred from the falling oil price, players in the industries should rework their numbers, taking advantage of spontaneous financing and ensuring no disruptions in their production.

Also speaking, the Director of Petroleum Resources, Mr. George Osahon, stated that the licenses of non-performing marginal fields in the country will be revoked by March 2015.

According to him, “With this inability to kick start operations and make fallow the operations, the licensing of these fields will be revoked by next year. “

He blamed lack of finance and inadequate technical capability for the inability of many of the operators to operate these assets.


– Vanguard

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