23 May 2013, Lagos – The Shell Nigeria Exploration and Production Company, SNEPCO, lamented, Wednesday, that all the companies that purchased its recently divested interests in the country drew funds from banks outside the country to pay for their transactions.
Commercial Integration and Business Value Manager at SNEPCO, Mr. Taaj Shobayo, disclosed this at an interactive Deepwater Workshop as he expressed sadness at the inability of Nigerian banks to fund large oil and gas transactions, especially deepwater projects.
Given this situation, he said, Nigerian companies involved in large oil transactions are forced to patronise foreign banks.
According to him, this situation is not helped by the short term focus of Nigerian banks, especially their lack of capacity to finance projects with longer gestation period.
“Financing for oil projects are sourced overseas. Companies that bought our assets secured their funds overseas.
“The choice of offshore funding is because of the long lead time of deepwater oil field projects. Nigerian banks cannot wait for such long period before recouping their funds,” Shobayo said.
Pointing out the cost intensive nature of deepwater oil projects, he noted that about $960 million could be spent between exploration and production.
According to him also, it takes between 10 to 50 years from the award of licence to actual production, a factor which has made it difficult for local financial institutions, with short term focus, to finance such projects.