The ability of the Nigerian banking sector to finance oil and gas sector continued to wax stronger with First Bank plc as the bank has advanced credit facilities in excess of N750 billion to various projects in the sector in recent times.
The advances are over 45 percent of the 1.5 trillion loans and advances to the oil and gas sector according to Kehinde Lawanson, one of the bank’s executive directors, while highlighting the contributions of the financial institution to the Nigerian energy sector and commitment to developing local capacity, at the just concluded offshore technology conference in Houston, Texas.
“If you look at the loans and advances component of our balance sheet, we are very close to about N1.5 trillion and I can say confidently that over 45 percent of this money went to the upstream, midstream and downstream of the petroleum industry. First Bank also finances 40 percent of petroleum imports into the country,” he said.
Showcasing the strength of First Bank to investors and operators at the Conference in the United States, Lawanson said the bank has since 1958 been financing projects for international oil companies and Nigerian companies.
The bank, he said, was lender and arranger of hybrid loans in excess of $225 million for cash call and other working capital financing for Shell Petroleum Development Company; syndicated a medium term loan facility of $225 million for pipeline construction and completion of a gas central processing facility at Uquo marginal field for Seven Energy and its subsidiary, Accugas Limited.
First Bank is also part of the syndicate that refinanced the $550 million facility used to acquire 45 percent interests from oil mining leases (OMLs) 4, 38, 41 from Shell and partners by Seplat, which produces combined average of 55,000 barrels of oil per day (bopd) and 125 million standard cubic feet per day (mmscf/d) of gas from the assets.
Other projects financed wholly or partly by First Bank include the $100 million 128km gas pipeline to Unicem Cement plant in Calabar, Cross River being handled by East Horizon Gas Company; co-lender of $289 million to Atlantic Energy for working capital and payment for 55 percent interests of National Petroleum Development Company in OMLs 26, 30, 34, 42; sole financier of the $15.15 million facility for acquisition of two vessels by Fymak Marine and Oil Services Nigeria Limited; and provided part of the bridge loan financing for the acquisition of ConocoPhillips’ divested interests in OMLs 60, 61, 62, and 63.
He said: “The assets that we have created in terms of loans to the oil and gas sector are doing very well. For instance, in First Bank, our non-performing ratio in total loans is less than three percent. That is comparable with any bank internationally. In the choice of the assets that we expose ourselves to, because that is where it starts when you choose, for starters we don’t provide loans for development, we provide loans for production.
“In other words, even where we are funding marginal fields, or some of the oil mining lease (OML) assets, we ensure that they are already in production. So, we can fund increase in production, equity acquisition but we normally don’t do speculative financing. So we have to be sure that you have actually discovered oil and you are in production.
Supporting the claims of the bank, Austin Avuru, managing director of Seplat Petroleum Development Company, said his company is one of beneficiaries, and that loans were secured at single digit interest rate between eight and nine percent, which also is dependent on the company’s credit rating. He also noted that other banks that play big in oil and gas project financing with friendly interest rates include Skye Bank and United Bank for Africa.
OLUSOLA BELLO
