Major Energy Company and Lenders Unveil $3 Billion Funding Package for Petroleum Service Providers

Shell Nigeria Exploration and Production Company Limited has collaborated with nine Nigerian banks to introduce a $3bn contract finance facility, aimed at enhancing access to credit for local oil and gas contractors working on projects for the company.

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This financing scheme, launched on Thursday, is designed to provide credit support to indigenous contractors handling projects for SNEPCo, with the option to access funds in both naira and United States dollars.

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The participating banks in this initiative are First Bank, Guaranty Trust Bank, Zenith Bank, Access Bank, United Bank for Africa, Stanbic IBTC, Standard Chartered Bank, First City Monument Bank, and Fidelity Bank.

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According to Ronald Adams, the Managing Director of SNEPCo, this initiative aligns with the objectives of the Nigerian Oil and Gas Industry Content Development Act, promoting greater in-country value retention, and reflects the spirit of the Act.

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Adams stated that the partner banks provide capital and discipline, while SNEPCo brings contracts and domiciliation of payments that de-risk lending, and the contractors provide performance, making each party accountable to the others.

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CJ Akwaeze, the Vice President, Finance, Shell Nigeria, noted that the financing scheme demonstrates Shell’s commitment to supporting the growth of oil and gas operations in Nigeria.

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Wole Ogunsanya, the Chairman of the Petroleum Technology Association of Nigeria, described the facility as a major boost for indigenous contractors, and a “gateway to unlocking contractor financing issues, which will also drive efficiency in contract execution,” according to his representative, Dr Joan Faluyi.

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Representatives of the participating banks commended SNEPCo for introducing the financing arrangement, stating that the partnership would strengthen local contractors, and pledged their continued support for the initiative.

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SNEPCo highlighted that Nigerian companies have played significant roles in its operations and project delivery, citing the example of 43 wholly Nigerian companies that participated in the turnaround maintenance exercise at the Bonga Floating Production Storage and Offloading vessel earlier this year.

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The company noted that the Contract Finance Facility is expected to further strengthen the capacity of Nigerian companies and enhance value delivery in the operations of Nigeria’s premier deepwater producer.