Published: November 12, 2012
Standard Bank and China Development Bank have agreed a US$550mn bank guarantee and bridging facility with Shoreline Natural Resources.
Shoreline Natural Resources, a venture owned by Heritage Oil and Nigeria’s Shoreline Power Company, has secured a US$550mn syndicated bank guarantee and bridging facility to back its latest acquisition.
One of the biggest deals to take place in Nigeria this year, the facility will be used to acquire a 30% stake in OML 30, a Shell-operated oil licence in the country’s Niger Delta. Standard Bank and the China Development Bank acted as mandated lead arrangers, with Ecobank Nigeria (which contributed US$100 million) and First City Monument Bank acting as additional lead arrangers.
Shoreline had to provide Shell with a 10% (US$85mn) deposit upfront, with the balance of US$765mn guaranteed in full by Standard Bank. This figure is underpinned by the US$550mn local bridging facility, with a further US$215mn underwritten by JP Morgan at international level. Standard Bank is now in the process of arranging permanent financing to replace the bridging loan, with Heritage Energy freeing up capital through the US$450mn sale to Genel of its Kurdistan oil block.
A particularly noteworthy aspect of the deal is the involvement of China Development Bank, which has provided a substantial but as yet undisclosed share of the bridging facility.
“The investment of Chinese banks in Africa, whether in private or listed companies, has been very limited,” says Roger Brown, head of oil and gas at Standard Bank. “The fact that they are now willing to fund hydrocarbons on the continent, and at such a high quantum, is a positive statement to the market.”
Shoreline’s move to acquire OML 30 comes in the context of a Nigerian government indigenisation policy that has already seen a number of oil and gas assets transferred into local hands. According to Brown, this is only the beginning.
“Nigeria is unique in that there has historically been very little indigenous ownership,” he says. “Shell has sold eight blocks and ConocoPhillips is in the market as well. We believe there are going to be a lot more.”