Group Managing Director/Chief Executive Officer of Skye Bank Plc, Mr. Kehinde Durosinmi-Etti, has canvassed loan syndication and club arrangements as one of the most preferable funding models for the oil and gas industry in the country.
The Skye Bank boss who stated this at the 2011 Oil and Gas conference in Abuja at the weekend , said loan syndication would mitigate the single obligor concerns which make it difficult for individual banks to finance the multi million dollar projects in the industry.
Presenting a paper titled “Supporting Oil and Gas Companies in Nigeria to Build Capacity”, Durosinmi-Etti said risk balancing by the oil companies, liquidity management and lower cost of funds could also make offshore financing attractive.
To avert falling on bad times during periods of price volatility, the banker advised the oil companies to adopt conservative assumptions on price and profitability projections to hedge against crude oil volatility, noting that better collaboration and high integrity among operators and promoters would engender remarkable progress.
On the contributions of Skye Bank to the development of the oil and gas industry, he disclosed that the bank had committed funds in excess of N25 billion to its oil trading portfolio in addition to funding several transactions under the Petroleum Products Pricing Regulatory Agency Scheme.
Durosinmi-Etti also said the bank had funded both local and international purchases of refined products in addition to financing the purchase of DPK, LPFO, AGO for several downstream operators.
According to him, other contributions of the bank include financing of storage facilities like the construction and commissioning of 66,000MT capacity tank farm with floating roof and deep water jetty, financing of 96,000MT floating storage facility, expansion of an indigenous firm to accommodate three standard modern vessels and expansion of its tank farm to 176 million litres holding capacity.
In the area of infrastructure financing, the Skye Bank boss listed the financing of liquid and gaseous transportation pipelines, financing and development of liquid hydrocarbon prospect blocs and acquisition of oil blocs by Nigerian oil companies.
He however noted that the level of banking sector support for Oil and Gas Companies in Nigeria would be dependent on a combination of factors such as policy direction of the government, product cost and profitability, quality of transaction and projects as well as corporate objectives of the banks.