Since the discovery of crude oil in commercial quantity in Nigeria in 1956, the oil and gas industry has played a significant role in Nigeria’s economy. The industry is, however, known to be capital intensive, as huge funds are required to carry out different activities in the industry ranging from exploration to production, as well as transportation and refining of the produced crude oil. Thus, the construction, expansion, modernization, and operation of oil and gas facilities are amongst the most expensive and technically complex projects.
Due to the capital-intensive nature of the oil and gas industry, it is mostly the case that a substantial part of the funding for investments in the industry is drawn from external financiers, such as banks and other commercial lenders. However, with the peculiarities in the Nigerian oil and gas industry, in addition to unstable global oil prices, the traditional financiers have become reluctant to grant loans to oil (and gas) companies, thereby imposing stringent conditions on the limited loan facilities extended to such entities. Also, the gradual shift from the use of fossil fuels to clean energy has made access to traditional financing of oil and gas projects very challenging.