The Nigerian National Petroleum Corporation (NNPC) says it has obtained a prepayment funding of circa $1 billion to support the upstream operations of its subsidiary, Nigerian Petroleum Development Company (NPDC)
The funding was obtained from Eagle Export Funding Limited, which, according to the corporation, raised financing in the domestic and international markets, to fund an upfront payment to NNPC under a Forward Sale Agreement.
“Prepayment financing is backed by future oil production of NPDC, and utilises a well-established structure to enable the purchaser of the crude, Eagle Export Funding Limited, to raise financing in the domestic and international markets, to fund an upfront payment to NNPC under a Forward Sale Agreement (FSA),” the NNPC said in a statement.
The statement disclosed that the crude oil prepayment has enabled NNPC to pay NPDC’s Tax obligations to the Federal Government of about $700 million with the balance utilised to fund NPDC’s capital and operating expenditures.
e360 learnt that the financing which funded the prepayment has been structured over two tranches: a 5 year USD amortizing tranche (“Tranche 1”) and a 7 year NGN amortizing tranche (“Tranche 2”). Both tranches benefit from a cash sweep with the 7-year tranche having a 1-year non-call period.
“These tranches shall be repaid by Eagle Export Funding Limited from the export sale proceeds of the NPDC crude, which in turn are backed by Letters of Credit, issued by banks with a minimum credit rating, in line with market precedent,” the NNPC said.
The corporation explained that the export price for the crude is the relevant NNPC Official Selling Price (OSP) for the corresponding calendar month and crude grade. Vitol and Matrix Energy have executed the standard NNPC Crude Oil Sale and Purchase Agreement.
The participants in the Eagle Export Funding Limited deal include Standard Chartered Bank, United Bank for Africa, Afrexim Bank, Union Bank and two oil trading companies, Vitol and Matrix Energy, the NNPC statement added.