The Group Managing Director/Chief Executive Officer, Skye Bank Plc, Mr. Kehinde Durosinmi-Etti, has said banks in the country are more favourably disposed to lending to oil producing companies at the point when oil reserves have been confirmed.

A statement by the bank on Friday quoted Durosinmi-Etti as saying, “Oil exploration is capital intensive in nature and it only makes sense to ensure that funds being availed the oil companies are paid back so that the banks will not suffer monumental losses and put shareholders’ capital at risk.”

Discussing the topic, ‘Sustainable oil and gas sector reforms at a United Kingdom-Nigeria Investment Partnership Forum in Lagos, the Skye bank boss said the consolidation exercise in the banking industry  had strengthened banks’ ability to fund the oil and gas sector.

The banker explained that since banks did not want to lose money, they would rather lend to oil exploratory companies after reserves had been confirmed.

Speaking on the marginal oil fields, which were given to indigenous companies and investors, Durosinmi-Etti said the challenge banks faced in lending to indigenous oil firms was that some of the companies had one dominant individual as the promoter, which was not in tandem with good corporate governance.

According to him, where the money needed by the oil companies is huge, loan syndication or club arrangement is preferred as it shifts the burden of providing the capital from one financial institution.

He said out of the 29 marginal oil blocks granted sometime ago, only nine were operating at the moment, noting that sustainability of operations was hampered by communal unrests, environmental factors and corporate social responsibility issues.

Also speaking, the Chairman,  Seplat Oil, Dr. Bryant Orjiako, acknowledged the contributions made by Skye Bank and Guaranty Trust Bank Plc to his company’s last capital raising, saying the two financial institutions had stood out in supporting indigenous oil companies.

A former Presidential Adviser on Petroleum, Dr. Emmanuel Ebogah, said the Petroleum Industry Bill, when passed, would lead to transparency and check corruption in the oil industry.

According to Ebogah, transparency in the oil industry will open the way for both foreign and local investors to invest in the industry as everything will be done in the open.

He described the oil industry as presently constituted as corrupt.

Source: The Punch (by Ademola Alawiye)