Banks have invested about $10 billion in acquisition of oil and gas assets by local players in the industry, it was learnt.
The Managing Director/Chief Executive Officer of First Exploration & Petroleum Development Company Limited, Mr. Ademola Adeyemi-Bero stated this on the sideline of the Nigeria Oil and Gas conference held in Abuja. He was corroborating the assertion that Nigerian banks are well capitalised to finance oil and gas projects across downstream, midstream and upstream. He said that local banks have invested about $10 billion to help Nigerian oil firms to acquire these assets in the last 10 years.
He also called the attention of the government to the importance of putting in place policy or to directly intervene in production of gas to power as well as the need to develop capacity.
The Executive Director, Corporate & Investment Banking, Access Bank Plc Mr. Elias Igbinakenzua also told The Nation that the progress made by indigenous upstream companies was made possible by some factors but noted that the independent companies have done well in the last few years.
Igbinakenzua said: “The independents have done well. Some things have made that possible. Let me start by thanking the government for creating the enabling environment for that to happen. I also must thank the IOCs who didn’t insist on holding on to the assets but let go to maximise our resources. I must also thank the lawmakers for the passage of the Nigerian Content Act. Today we can say clearly say that we have some number of Nigerian vessels out there in the waters because of the Cabotage law, which has made marine business booming”.
“The Local Content Act has given the local production and contribution in the oil and gas sector a great deal. Today 20 percent or more of the oil reserves is held by the independents, which is between 9 and 10 billion barrels. That is a lot. It is a huge success story to tell. There is no success journey that is so easy. It takes some roughness to get there”.
“That has happened because the local banks have also come of age. Today you can find a Nigerian bank that can comfortably put half a billion dollars in a project. The banks have gotten well capitalised to support the oil and gas sector and that support has been immensely behind the local players. The issue of maximum lending to the sector came up but after the CBN saw the need to lend to the sector, it put the directive behind for now”.
“As of today what we have as the operating law for the banks to lend to the oil and gas sector is not just 20 per cent. It is actually more than that. In fact, the old policy said we can do 20 per cent downstream, 20 per cent midstream, and 20 per cent upstream, which is a huge number. But you must not forget the rules in lending. If you allow that huge amount to go into a sector without the risk being well managed, then you risk the financial sector and that has its impact on the entire economy.
Source: The Nation