IFC may support Niko's projects in KG Basin

Will invest around $80 million

Canada-based Niko Resources Ltd, an exploration and production company, has lined up around $340 million capex in India and Bangladesh. The capex in India is for the work-over of wells and the development of the R-cluster and Satellite fields in the Krishna-Godavari Basin off the eastern coast.

The proposed investment will be backed by World Bank’s investment arm - the International Finance Corporation, which is planning to invest around $80 million.

The company has asked IFC to consider providing financing together with some other investors to support the company’s capex programme, said IFC.

The total financing of $340 million will be used to fund the company’s capex in India and Bangladesh through 2016 and the refinancing of some outstanding debt. The proposed IFC financing is up to $80 million, said IFC.

The capex programmes include work-over of wells in the D1-D3, MA and the development of the R-cluster and Satellite fields and upgrading the surface facilities in the Krishna-Godavari Basin off the eastern coast of India and to take up development work for Block 9 in central Bangladesh, between Dhaka and Comilla.

The project in Bangladesh includes two development wells, upgradation of the production facility and installation of additional compression to arrest production declines.

The company will also restructure its debt by refinancing the expiring debt instruments with loans of longer maturity.

IFC said that it has reviewed the governance and transparency for both the countries by consulting the World Bank's metrics and it was of the view that any governance risks to project benefits are contained, especially as the project's key impacts are non-fiscal in nature and specifically are in providing support to develop natural gas resources, a cleaner source of fuel.

“IFC will play a key role as an anchor investor to mobilise financing in a difficult investment climate and to support the company as it undertakes a restructuring to ensure its financial sustainability,” said IFC.

Niko Resources Ltd is a junior exploration and production company based in Calgary, Canada and listed on the Toronto Stock Exchange, with a focus on producing natural gas in the South Asia region.