The Shell Nigeria Exploration and Production Company Limited (SNEPCo) has signed a $3 billion contract financing facility with nine Nigerian lenders aimed at improving access to credit for indigenous contractors executing projects in Nigeria’s oil and gas sector.
Known as “Contract Finance Facility”, the programme is designed to provide both working capital and credit support in Nigerian naira and U.S. dollars for indigenous companies delivering contracts for SNEPCo’s operations.
The initiative, unveiled in Lagos, Nigeria’s financial hub, is expected to deepen Nigerian local content development (which currently stands at 56% from 5% in 2010), improve project execution and ease one of oil industry’s biggest constraints—access to affordable financing.
The new financing facility will also further enhance the technical and financial capacity of Nigerian indigenous contractors, supporting more efficient execution of projects in Nigeria’s deepwater oil sector, as well as advance the country’s local content objectives.
Ronald Adams, managing director of SNEPCo, at the signing of the memorandum of understanding (MOU), said the financing initiative aligns with the objectives of Nigeria’s oil and gas local content policy by enabling greater value retention within the country.
“The initiative reflects the spirit of the Nigerian Oil and Gas Industry Content Development Act, which is aimed at in-country value retention,” Adams said.
He explained that the participating banks will provide capital while SNEPCo will support the facility through contract awards and payment domiciliation, reducing lending risks.
He added that contractors will be responsible for delivering projects, creating a framework of shared accountability among all parties.
Shell Nigeria vice president, in charge of finance, C.J. Akwaeze, said the programme highlights Shell’s long-term commitment to expanding Nigeria’s oil and gas industry, and strengthening the capabilities of indigenous service providers.
Among the participating banks include: Access Bank Plc, Fidelity Bank Plc, First Bank of Nigeria Limited, First City Monument Bank (FCMB), Guaranty Trust Bank, Stanbic IBTC Bank, Standard Chartered Bank Nigeria, United Bank for Africa Plc (UBA), and Zenith Bank Plc.
Oil industry stakeholders lauded the initiative, describing it as a significant step toward addressing financing challenges that have long constrained local contractors.
Wole Ogunsanya, chairman of the Petroleum Technology Association of Nigeria (PETAN), represented at the event by Joan Faluyi, described the financing facility as a gateway to resolving contractor financing bottlenecks and improving efficiency in project delivery.
The participating banks pledged to continue their support for the programme, describing it as an important collaboration that will strengthen Nigeria’s energy value chain, and expand financing opportunities for local businesses.
According to SNEPCo, Nigerian companies were already playing increasingly prominent roles in its operations. For example, during the turnaround maintenance (TAM) of the Bonga, Nigeria’s first deep water floating and production – Floating Production Storage and Offloading (FPSO) vessel earlier this year, 43 wholly Nigerian companies participated, accounting for the majority of the 53 contractors involved in the exercise.
