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As part of its mandate to finance and promote intra- and extra-African trade, the African Export-Import Bank (Afreximbank) has reiterated its commitment to support and finance any business that is beneficial to Africa.
The pan-African finance institution said this recently at PricewaterhouseCoopers (PwC) Nigeria’s Oil and Gas Stakeholders Forum, tagged “Marginal Oilfield Licence: After winning, what next?”
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) show that out of 30 marginal fields that were licensed in 1999, only 17 were producing, indicating that access to finance after winning a bid as marginal oilfield operators is a critical issue people deal with.
Speaking at the event was the Head of Client Relations for Anglophone West Africa, Afreximbank, Peter Olowononi, who said, “As an African bank, even when other international institutions fail to provide finance for business on the continent, we have no choice but to provide funding because we have no other market.”
He stated that the bank has supported over 50 per cent of the marginal field owners right from their bidding stage, supported a fertilizer company, supported the construction of an Indorama facility, and even financed LNG project.
However, the bank has risk criteria that marginal field holders must meet before they can be provided with funding.
“We have said that they must get to first oil, meaning that they must go into the assets, using equity. The owners of the business must use their own equity to develop the assets and bring out the oil so that at least once it is proven, and the oil has started flowing, based on that production, we can then give them a loan to drill more wells to put in the infrastructure in place to ramp up production,” he said.
On his part, a partner at PricewaterhouseCoopers (PwC), Pedro Omontuemhen, noted that the idea behind the forum was to share insights from very experienced people who could tell the new license winners what they needed to do to thrive in the industry.
“We know there is euphoria of winning, but what follows next after having the license? How do you go into production? Having the right kind of partnership team, how do you raise funds since this is a highly capital intensive enterprise? So this is the reason we organised the stakeholders meetings,” Omontuemhen said