Daily Independent (Lagos)
Adeola Yusuf
23 June 2009
Lagos — Over $120 billion investments in Nigeria's oil and gas industry have started to backpedal, investigations by Daily Independent have revealed.
This was a result of the qualms expressed by lending banks to finance them "for fears of uncertainty in what the future owes for Nigerian oil and gas sector."
The oil-rich Niger Delta region of Nigeria has been engulfed by crisis, which has impacted negatively on the country's 1.8 million barrels per day oil production and this has started to brunt investments in the sector.
Checks by Daily Independent showed further that some banks have directed their energy directorates to placed veto on lucrative investments like field development, LNG, LPG and GTL projects, Independent Power Plants, and rig and vessel acquisitions.
The plan by the Federal Government to increase proven reserves from 35 to 40 billion barrels of oil and increase production capacity from 3 to 4.5mbbl/d by 2010 single handed needs additional investments of $67 billion, in which no bank has signified interest.
Others ventures, which are "no go areas for banks at the moment," are gas utilisation projects, gas transportation, as well as asset maintenance and replacement.
According to an official of the Energy Directorate of the United Bank for Africa (UBA), Aminu Ismail, at the 2008 lecture organised by the Nigerian Association Energy Correspondents (NAEC), the country's energy sector is an 'investment haven. However, current trend shows that few major bank sponsored investments have taken off in the country since 2008.
The capitalisation and consolidation of banks in Nigeria, it would be recalled, were meant to ensure smooth lending for major investments in the country.
Seven per cent of the world's proven oil and gas reserves, the World Bank estimates showed, are located in Africa. The UBA official maintained, therefore, that good economic returns for investors, exploration costs borne by company, optimised project feasibility study and equity from project sponsors are factors needed to be in place to harness them.
"Experienced and credible management and/or operator, use of proven technology, experienced contractors, credible off-takers, company's policy and structure, good community development initiatives and ability of project cash-flow to repay debt, are ingredients for smooth lending," the official said.
Areas where investments are still need, the official added, "are pre-export financing, overdrafts, bankers' acceptances, commercial papers, term loan (short/medium term), note issuance facilities, guarantees/indemnities, loan syndication, post-completion re-financing facilities (for optimised pricing and tenor), back-stop facilities."
Militants, in a night operation penultimate week, attacked the Trans Ramos pipeline, an oil facility belonging to Shell at Aghoro-2 community in Bayelsa State, forcing the oil major to "shut-in some oil production in the region."
The attack on Shell facility, after the bombing of 450, 000 barrels per day Trans Forcados Trunkline in Delta State, is the second in the week occurred just as oil prices at the weekend, traded around $72 a barrel after the news that over 700 oil workers fled oil platforms in the Nigeria's oil rich Niger Delta region spread in the global market.
Shell Petroleum Development Company (SPDC) on Thursday confirmed the attack, stating that some "oil production has been shut-in to avoid potential environmental impact."
The statement read: "SPDC Joint Venture (JV) can confirm the Trans Ramos pipeline at Aghoro-2 community in Bayelsa State was attacked last night (June 17). Some oil production has been shut-in to avoid potential environmental impact.
"The relevant government agencies have been informed and a joint investigation visit is planned."
Over 700 petroleum workers had on Wednesday fled various oil platforms in the Niger Delta, abandoning their duty posts for safety after Movement for the Emancipation of Niger Delta (MEND) threatened renewed attacks on them.
United States oil giant, Chevron, alone evacuated about 350 of its workers and contractors in an early morning airlift exercise from the Escravos airfield to Ozubi airport in Warri, Delta and other parts of the war-torn region following repeated attacks on its facilities.
Oil, which sold for $32 in March, began a price surge immediately after the military onslaught on militants began in Nigeria.
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