Barclays Bank has joined firms supporting Kenya’s nascent oil sector by securing a Sh1.1 billion ($13 million) financing package for a UK-based explorer.
It becomes the first bank in East Africa to finance oil exploration in a deal with Marriott Drilling Africa Limited (MDAL).
The oil firm is a subsidiary of UK-based Marriot Drilling Group and the financing deal will cover five years.
“Signing a financing agreement of this value reflects the ability and commitment of Barclays Bank to shoulder its responsibilities in financing the projects of leading companies which have a clear strategy,” the managing director Jeremy Awori said Friday in a statement.
Barclays said MDAL will use the funds to acquire an oil drilling rig.
This a significant development for the Barclays Plc subsidiary as it has the potential of shoring up the fortunes of its local business. It comes at a time the bank’s profit fell 13 per cent to Sh3.7 billion in the first half of the year.
The new development follows recent oil finds in Turkana County that have heightened activity in the sector as financial and other institutions position themselves for a share.
“We believe that banks have a responsibility to assist companies like Marriott in the development of oil resources in Kenya and elsewhere in East Africa,” MDAL managing director, Jonathan Hobday said.
Nigeria’s Guaranty Trust Bank has also linked its tie-up with Fina Bank to a strategy to tap into Kenya’s oil and mineral sectors.
Oil firms have lately faced difficulties hiring oil rigs following a shortage of the equipment globally.
UK firm, Tullow Oil Plc, which recently struck additional oil deposits at Etuko-1 well in Turkana County has been scouting for rigs. The scarce supply has delayed drilling for oil in East Africa despite growing evidence of reserves.
The discovery of oil and natural gas in the East Africa is expected to lure insurers although most would have to foreign partners due to low capital bases.