Standard Chartered Bank in its strategic move to support Nigeria's Oil and Gas sector has structured a deal with eight other financial institutions to provide $220 million (about N25.96 billion)bank debt financing priced at Libor +275 barrels per day (bps)for the Nigerian National Petroleum Corporation (NNPC)and Mobil Producing Nigeria's (MPN)NGL II project.

The new debt, in the form of a 364-day bridge facility, was required to bring on-line the NGL II project, which has already gone into the completion testing phase. The transaction was advised, structured, and arranged by Standard Chartered Bank and funded by eight Nigeria-licensed banks. It follows a package of combined sponsor equity and senior bank debt financing placed in 2004.

NNPC and MPN, have collaborated previously on NGL I and Additional Oil Recovery (AOR)projects through their longstanding joint venture. NGL II is expected to increase oil recovery in AOR by 530 million barrels, process approximately 950 million scfd of rich gas, and achieve the production of 45,000 bpd of NGLs for fractionation into propane, butane, and pentanes+.

With gas monetisation becoming an increasingly important priority for the government of Nigeria, the NGL II project breaks ground on several key national strategic objectives and achieves an important financial milestone.

NGL II derives significant incremental revenues outside the Organisation of Petroleum Exporting Countries (OPEC)quota for Nigeria's treasury and enhances oil production without the associated routine gas flaring. The project complies with Nigeria's twin goals of monetising gas reserves by stripping NGLs from rich gas and of eliminating gas flaring of more than 300 million scfd. The lean gas will be available for future monetisation. NGL II's construction also relied heavily on the use of Nigerian contractors and content.

The transaction represented the first substantial oil and gas sector project financing in Nigeria funded exclusively by Nigerian-licensed banks: Oceanic Bank, United Bank for Africa, Standard Chartered Bank Nigeria, Access Bank, Skye Bank, Union Bank (Mandated Lead Arrangers) with Platinum Habib Bank and Zenith Bank (Lead Arrangers).

ccording to the Managing Director of Standard Chartered Bank Nigeria, Christopher Knight, "this transaction deepens the sponsors' relationship with the domestic bank debt market significantly and paves the way for Nigerian banks to play an ever-increasing role in the critical oil and gas sector. We will continue to partner with the government of Nigeria and Nigerian entrepreneurs within the oil and gas industry on strengthening local content policy."