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FAR secures $300mn credit to cover its share of Sangomar costs
SENEGAL
AUSTRALIA’S FAR has secured funding to cover its share of development costs at Sangomar, an oil-bearing block located offshore Senegal. In a statement dated January 20, the company reported that it had arranged to borrow the sum of $300mn from BNP Paribas (France), Glen- core (UK-Switzerland) and Macquarie Bank (Australia). Each party will contribute $100mn, it said.
The lenders have already approved the senior secured reserve-based credit facility, it said. The loan will have a term of seven years, including a four-year grace period, and will carry an interest rate of LIBOR + 7.75%.
FAR had said earlier this month that BNP Paribas, Glencore and Macquarie Bank had already agreed to offer a credit package worth $200mn for the Sangomar project. It also said it was negotiating with the lenders in the hope of increasing the size of the loan to $300mn.
The development of Sangomar is likely to cost about $4.2bn, and the Australian com- pany has estimated its share of the expenses at $492mn. The loan will cover most of that sum, and FAR has already raised another A$146mn ($99.96mn) through the issuance of a condi- tional placement of shares with institutional and high-net worth investors in December 2019. It is also launching a share purchase plan for existing shareholders that will allow it to raise another A$30mn ($20.54mn).
The announcement from FAR came just a few days after Woodside Petroleum, the Australian company that serves as operator of the project, instructed its contractors to move forward with drilling, installation and subsea construction work. It also followed closely on the heels of news that the partners had made a final investment decision (FID) on the project.
The Sangomar block encompasses three sep- arate fields – Rufisque, Sangomar Offshore and Sangomar Deep Offshore – that give the RSSD joint venture its names.
The partners discovered oil there in 2014 and have determined that the block contains an esti- mated 645mn barrels of oil equivalent (boe) in recoverable reserves. This figure includes 485mn barrels of crude oil and 160mn boe of natural gas.
Woodside and FAR have set up a joint venture known as RSSD with PetroSen, the national oil company (NOC) of Senegal, and Cairn Energy, another Australian firm. Equity in the venture is divided between Woodside, with 35%; Cairn Energy, with 40%; FAR, with 15%, and PetroSen, with 10%.
RSSD’s members are currently involved in a lawsuit over the division of equity in the pro- ject. They are awaiting the results of arbitration over the dispute, which relates to the decision by the US company ConocoPhillips to transfer its 35% stake in and operatorship of the project to Woodside in 2016. ™
POLICY
Eskom talks loans with the banks
Eskom and South Africa’s National Treasury are in talks with banks to renew a ZAR15bn ($1mn) government-guaranteed loan facility that the indebted state power utility announced in February last year.
While the lenders are reluctant to renew the facility given the parlous state of Eskom’s finances, the funding is needed to help keep the company afloat, two people familiar with the discussions said, Bloomberg reported.
Eskom, which has some R450bn in debt, isn’t generating enough income to cover its operating costs, and has instituted regular power outages as insufficient spending on
NEWS IN BRIEF
maintenance leads to plant breakdowns. While the government has provided
the utility with a series of bailouts, Finance Minister Tito Mboweni has said there is no scope to provide more aid.
The talks on the loan facility need to be finalised this month, said the people, who spoke on condition of anonymity, Bloomberg said.
Eskom didn’t disclose the identity of the banks when it announced that it had secured the initial financing.
“Eskom and government are in negotiations with the lenders and discussions remain confidential,” Treasury said in response to emailed questions. Eskom declined to comment.
President Cyril Ramaphosa’s government has made rescuing Eskom its key focus as
it tries to kick-start a stagnating economy
that’s hamstrung by a lack of power. Key to its success will be keeping the utility adequately financed.
INVESTMENT
BlackRock aims to raise $500mn for green investing
A BlackRock-backed group aims to raise
an initial $500mn for a private equity fund that will invest in climate change-linked infrastructure upgrades in emerging markets, Reuters reported
The group will provide the first $100n of funding for the Climate Finance Partnership (CFP), which was set up in 2018 along
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Week 03 23•January•2020