Bestaf $300m loan: NNPC to supply 8,000 crude oil barrels per day in five years

By Seun Ibiyemi

With the loan of $300million, which was used to acquire oil blocks from Chevron Corp, Nigerian National Petroleum Company Limited (NNPCL) is to supply 8,000 barrels of crude per day for four to five years.

Bahamas-registered Bestaf Funding Limited, a subsidiary of MRS Holdings, funded the purchase valued at $300 million, according to NNPC’s latest financials by Umar Ajiya, NNPC’s chief financial officer.

NNPC will pay Bestaf back over four and a half years by supplying Dantata’s MRS 8,000 barrels of oil per day throughout the contract duration, according to the financial report quoted by Bloomberg.

It equals 9.4 million barrels over the period, not including Saturdays and Sundays, translating to $737.7 million (using Brent crude’s price of $78.5 per barrel), 146 per cent higher than the original sum of acquiring the assets.

The oil is the “sole repayment guarantee” and will be lifted by MRS Holdings’ unit operating as Bestaf’s trading agent, according to Ajiya.

The proceeds shall be deposited into a designated account held at the African Export–Import Bank “for regular repayment,” he said.

Afreximbank loaned Bestaf the $300 million to fund NNPC’s asset purchase, according to Ajiya.

Afreximbank and a Bestaf company signed a memorandum of understanding, MoU, a year ago for $1 billion to support the firm’s commercialisation of the gas deposits in OML 86 and 88 under an agreement with the NNPC.

The NNPCL has revealed that the firm funded its purchase of oil blocks from Chevron Corp., offering an insight into how the firm could back its ambitious expansion plans.

A subsidiary of MRS Holdings Ltd Bestaf provided the $300 million to buy two shallow-water licenses divested by Chevron, according to NNPCL’s  most recent financial statements.

The transaction was completed in May and the financing is secured against crude from producing fields within NNPC’s portfolio, it said.

The forward sale agreement was concluded between NNPC and Bahamas-registered Bestaf Funding Ltd, according to the financial statements and an emailed response from NNPC’s chief financial officer, Umar Ajiya.

Bestaf is a group of companies that are part of MRS, a Lagos-headquartered conglomerate belonging to the family of Sayyu Dantata, the 53-year-old younger half-brother of Africa’s richest person, Aliko Dangote.

MRS is active in the storage, retailing and distribution of petroleum products, and one of its subsidiaries is among the firms with which the NNPC swaps crude for imported gasoline to meet Nigeria’s needs of the fuel.

Bestaf companies develop real estate, manufacture lubricants, store shipping containers and provide support vessels.

Recently transformed into a fully commercial venture, the NNPCL is looking to grow its presence throughout Nigeria’s energy sector. The company purchased Chevron’s 40 per cent operating stakes in the licenses Oil Mining Leases 86 and 88 after preempting negotiations between the US major and local firm Conoil Producing Ltd.

The NNPC is also trying to buy four blocks that Seplat Energy Plc agreed in February to acquire from Exxon Mobil Corp. for $1.3 billion.

Ajiya declined to comment on whether the financing model used to take over Chevron’s permits could be emulated to purchase Exxon’s assets, saying such a disclosure “would amount to intrusion into our business strategy.”