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Nigerian gas venture to get $1.28bn loan

Financial Times: Nigerian gas venture to get $1.28bn loan

“…international banks and credit agencies lent $1.06bn to a Royal Dutch/ Shell-backed Nigerian liquefied natural gas project intended to become one of the largest in the world.”

By Michael Peel in Lagos and James Boxell in London

Posted 22 September 2004

A consortium of banks and the US government’s foreign private investment agency is to spearhead a $1.275bn loan to a gas venture run by ExxonMobil and the Nigerian government – a deal billed as the largest project finance loan in sub-Saharan Africa.

Nigeria, which has failed historically to provide full financing for the expansion plans of its joint ventures with oil multinationals, claims the deal will help to harness its huge but mostly untapped natural gas reserves. The investment, arranged by Credit Suisse First Boston bank and signed on Friday, comes after international banks and credit agencies lent $1.06bn to a Royal Dutch/ Shell-backed Nigerian liquefied natural gas project intended to become one of the largest in the world.

CSFB will provide $250m and three Nigerian banks will lend $50m for the expansion of the natural gas liquids joint venture between Exxon and the government, while a further $325m will come from the US Overseas Private Investment Corporation, which deals with lending to private sector ventures involving US companies worldwide. The remaining $650m will be lent by ExxonMobil.

Analysts say global demand for natural gas products is growing fast, especially in the US, but Nigeria’s attempts to capitalise have been held back by a reputation for instability and its failure to make full repayments on a foreign debt burden estimated at $33bn.

A consortium of export credit agencies and more than two dozen banks agreed in 2002 to part-finance the expansion of a $12bn liquefied natural gas plant in southern Nigeria jointly owned by the government, Shell, Total of France and Italy’s Eni.

The project claims it is commercially successful, although it has received unwelcome publicity because of a bribery probe into its main contractor.

The growing number of large natural gas projects in Africa and elsewhere has led some analysts to warn of a possible supply surplus, with Bruce Evers of Investec saying such a situation could arise as early as 2007.

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