Infrastructure investor May 2008 - Simon Griffiths

infrastructure investorproduction sharing-agreement. Libya’s NationalOil Corporation (NOC) also signed a 20-yearaccord to supply Indonesia’s Pertamina with aminimum of 50,000 bpd beginning in April. TheJapanese are also in Tripoli: a consortium of fiveFor Total, developing itsdeep offshore resources inNigeria is one of the Group’smain growth driversin Africafirms (Nippon Oil, Inpex, Japan PetroleumExploration, JGC and Nippon Yusen KK) is in talksto build an oil refinery (200,000 bpd), at a totalcost of $4.5bn.Total Gabon plans a $2bn redevelopment ofits Anguille oil field, while French energy companyMaurel & Prom declared its Onal field on target tostart production in Q4 of 2008. In Ivory Coast,the national oil company Petroci is to build a385km pipeline in the next 19 months, at a costof $249.3m, that will connect the port of Abidjanwith the northern city of Bouake, enablingdeliveries to landlocked neighbours Mali andBurkina Faso. Ivory Coast, which has a small butgrowing offshore oil output but imports crudefrom other big regional producers such asNigeria, already has one oil refinery in Abidjan andprivate developers this month announced plansto build a second one. The second refinery will bea 60,000 bpd unit to be built in a $1.4bn jointproject between Petroci and US firms EnergyAllied International and WCW International HoldingCompany.African crude production(thousands barrels a day)2004 2005Algeria 1,946 2,015Angola 966 1,242Cameroon 62 58Chad 168 173Congo 240 253Egypt 721 696Equatorial Guinea 329 355Gabon 235 234Libya 1,607 1,702Nigeria 2,502 2,580Sudan 325 379Tunisia 72 74Other 75 72Total Africa 9,266 9,835Total World 80,198 81,088Source: BP Statistical Review of World Energy 2006SPONSORED ADVERTORIALNigerian banks have historically been restrictedto involvement in the downstream sector of theenergy industry, but today most of the seriousbanks have shareholder funds of up to US $1billion, so they have the capital to becomeinvolved in upstream deals.By some estimates the annual businessavailable, both downstream and upstream, isabout $20 billion, so there’s significant scopeto increase deal size. Today, I believe thepotential deal size for a serious bank would befrom around N25 billion ($213m) up to N75billion ($639m) for some of the top-tierNigerian banks. The most important thing, is toidentify the right transactions and structurethem properly, while also being able to sellthem down into the secondary market. Thisfrees up your balance sheet to take on newthings, and keeps your deal pipeline open.FCMB stepped into this arena with ourrecently concluded Afren Plc deal. It was a realtrailblazer in this market, as we providedreserve-based lending in the form of a $50mloan with $12m of warrants supporting thedeal.Nigeria’s offshore deep water operationstend to be foreign-owned, but the moreSPONSORED ADVERTORIALWillbros has operated in Nigeria for 45 years,and across Nigeria and west Africa is theleading company providing and implementingproject partnering solutions. We are 100%Nigerian-owned and local content compliant,with approximately 1,900 staff of which atleast 1,500 are Nigerian.In February 2007, Willbros was bought bya group of Nigerian core investors under theumbrella of Ascot Offshore Nigeria Limited.Ascot boasts a solid track record and strongtechnical capability, and we will be rebrandingto Ascot within the next few months.Willbros/Ascot operates internationallyfrom regional offices in Togo, Benin and Ghana,and has the capabilities to match every sectorof oil and gas service in the region. Thesecapabilities include landline, dredging,fabrication, offshore, coating, and themanufacture and installation of concrete matslocally in Nigeria, as opposed to the currentpractice of importing them. Our facilities aresuperbly equipped to manage these services:we have two excellent fabrication facilities inChoba and Isiodu, which have large acreagesand waterfronts in Rivers State, and 80 vesselsby Peter Obasekimarginal onshore shallow water facilities tendto be Nigerian-owned and serve as a trainingground for local companies. It is creatingopportunities for local banks to participate inthese transactions, such as the acquisition oftwo of Shell’s oil blocs by Oando. We wereinvolved in writing some of the guarantees thatbacked up the winning bid. The fields are quitelarge, up to 20,000 bpd, so we are very proudof our participation and expecting follow-ondeals from this transaction.Unfortunately, the risks in the Niger Deltaare still very real, and you have to be prepared.Because of the size of these transactions it isadvisable to act in concert for large deals soyou can co-finance and risk-share. Where youneed leadership is in the ability to structure.We are currently involved in a $250m deal withBNP Paribas, which is structured uniquely tomitigate risks. We’ve ensured the transactionhas an international scope, and that some ofthe assets being invested in are not in theNiger Delta.Peter Obaseki is Senior Vice Presidentand Head of Corporate Banking at FirstCity Monument Bankby Steve Juddfor use in onshore and offshore work.We’re aware that the Niger Delta is unsafeat present, and we treat safety, health andsecurity as the number one priority. At the endof each shift our staff must return home safe,and we’re pleased that we recently exceededone million man-hours on one of our projectswithout a lost-time-accident or securityincident.We’re also deeply committed to trainingour staff – we don’t just believe in feedingpeople fish but teaching them how to fish. Oneproject we’re currently carrying out is on oneof our swamp projects, where we had theoption of buying potable water for the short-lifeof the project, but decided to drill numerousboreholes in the area to provide the communitywith much-needed potable water for the longterm. We also award scholarships to about 60students from our host communities at Chobaand Isiodu, across the various disciplines, andhave an internal Engineering Graduate TrainingScheme in place.Steve Judd is Managing Director ofWillbros Nigeria/Ascot Offshore Nigeria Ltd68