'They are looking for a $30 million-50 million facility which will be used to finance the first phase of the water reinjection programme. It may also contain an element of refinancing for some of the acquisition costs,' says a banker close to the deal.

The joint venture, which is to operate under the name of Daleel Petroleum Company, received final approval for the acquisition of the onshore block from Japan Petroleum Exploration Company (Japex) and Japan National Oil Corporation in early July (MEED 26:7:02, Oil & Gas).

The acquisition finance went through a number of permutations as the transaction evolved. Initially, MB Petroleum - which had appointed Close Brothers Internationalas its financial adviser - was preparing to take on commercial debt to cover the bulk of its $67 million bid for the concession but, by the time CNPC joined the proposed deal, estimates of the size of the oil reserves and the prospects of recovery levels had been considerably increased. CNPC valued the concession at $100 million-110 million and obtained a bank guarantee, understood to be from Citibank, for its 50 per cent share in the deal. It is understood that MB Petroleum filled the remaining $12 million-17 million gap from its own balance sheet, but is keen to refinance some of this.

The banks understood to be interested in extending a debt facility include Societe Generale, WestLB, HypoVereinsbankand Mizuho Financial Group.