Under the terms of the MoU, Trafigura will provide ADM with pre-financing of up to $100m for acquisition or development of any project
Oil and gas investing company ADM Energy and Dutch commodities trader Trafigura have signed a non-binding memorandum of understanding (MOU) to enable the development and financing of energy projects in Africa.
As per the terms of the MOU, ADM and Trafigura will create a strategic alliance, which allows ADM to serve as the sponsor for investment opportunities in projects.
ADM will be in charge of originating, analysing, developing, structuring and negotiating potential projects with counterparties.
The projects will be presented to Trafigura for further evaluation as a trading counterparty or financing provider, ADM said.
ADM CEO Osamede Okhomina said: “We have identified a number of excellent investment opportunities in Nigeria and West Africa.
“With our extensive network, and the potential access to capital this MOU gives to ADM, we believe the Company is well positioned to capture future opportunities.”
Upon securing approval for the projects from Trafigura, the two parties will enter into negotiations for signing a definitive agreement for each of the approved projects.
Trafigura Africa Energy Trading head James Josling said: “Today’s signing shows our intention to work with an upstream investing company that has strong roots in Nigeria and West Africa, and is well placed to develop its potential while being committed to practicing good corporate governance as evidenced by ADM’s London quotation.”
ADM will receive up to $100m in pre-financing for each approved project
ADM will receive conditional pre-financing of up to $100m from Trafigura to acquire or develop approved a project.
Upon providing financing, Trafigura will have exclusive rights to market the crude oil produced by the project for an agreed period and on market terms.
Additionally, the two firms will cooperate to arrange complimentary debt and equity funding for the approved projects, if required.
In 2019, Trafigura wholly-owned subsidiary Trafigura Marine Logistics (TML) agreed to sell ten Suezmax tankers to Frontline, through the sale of a TML special purpose vehicle which holds the vessels.