The Nigerian National Petroleum Company Limited (NNPCL) has committed 272,500 barrels of crude oil per day to a series of crude-for-loan agreements, amounting to a total debt of $8.86 billion. This pledge translates to approximately 8.17 million barrels of crude allocated each month to service these loans.
According to an analysis based on a report from the Nigeria Extractive Industries Transparency Initiative (NEITI) and NNPC’s financial statements, these crude-for-loan deals support several major projects. Notable among them are Project Panther, Project Bison, Project Eagle Export Funding (covering the Original, Subsequent, and Subsequent 2 Debts), Project Yield, and Project Gazelle.
NNPC has already repaid $2.61 billion, representing 29.4% of the total loan, while the remaining $6.25 billion (70.6%) is still outstanding. Of the total $8.86 billion credit facility, approximately $6.97 billion has been received through seven crude-for-loan agreements.
One of the key initiatives, Project Panther, is a joint venture between NNPC and Chevron Nigeria Limited, which secured $1.4 billion in funding. In this deal, 23,500 barrels per day (bpd) of crude are pledged for repayment, with a moratorium period before repayments begin. The loan terms include a Secured Overnight Financing Rate (SOFR) plus a 5.5% margin and a liquidity premium.
Another significant project, Project Bison, is linked to NNPC’s partial acquisition of a 20% equity stake in the Dangote Refinery, though the company only secured a 7.25% stake. The project was backed by a $1.04 billion loan from Afrexim Bank, with 35,000 bpd used as collateral. This loan was fully repaid by June 2024.
Project Eagle Export Funding involves three separate loans. The original loan, secured in 2020 for $935 million, was fully repaid by September 2023 using 30,000 bpd. A subsequent loan of $635 million was also repaid within the same period. The third loan, known as Project Eagle Export Funding Subsequent 2 Debt, secured $900 million in 2023 with 21,000 bpd pledged. Repayment is set to begin in June 2024, and the loan will mature in 2028.
Project Yield, a $950 million loan aimed at refurbishing the Port Harcourt Refining Company, has 67,000 bpd pledged for repayment. Although the loan was secured in 2022, fuel production at the refinery is yet to commence, despite multiple delays and postponed promises from NNPC and the Federal Ministry of Petroleum Resources.
Project Gazelle is another major crude-for-loan initiative, designed to stabilize Nigeria’s foreign exchange market. This $3 billion forward sale agreement, secured in December 2023, involves 90,000 bpd from Production Sharing Contract assets. As of the end of 2023, $2.25 billion had been drawn, with repayments scheduled to start by mid-2024.
These deals come amid Nigeria’s struggle to boost oil production. NEITI’s 2022-2023 report highlighted a steep decline in crude output, with Nigeria producing 490.94 million barrels in 2022, down from 798.54 million barrels in 2014. Although output increased slightly to 537.57 million barrels in 2023, it still fell short of the country’s peak production capacity.
One of the main challenges affecting production is deferment. In 2023, Nigeria deferred 110.66 million barrels due to unscheduled maintenance, repair issues, and oil theft, down from 153.44 million barrels deferred in 2022. Theft and sabotage continue to plague the sector, with 5.25 million barrels lost in 2023.
The House of Representatives Special Joint Committee has since directed NNPC to halt further crude-for-loan agreements. This directive follows reports of plans for a $2 billion oil-backed loan to address a $6 billion backlog owed to international oil traders, particularly after the removal of fuel subsidies.
In August 2023, NNPC announced a $3.3 billion emergency crude oil loan from the African Export-Import Bank to stabilize Nigeria’s exchange rate and support government finances. The loan, also referred to as Project Gazelle, uses a conservative oil price benchmark of $65 per barrel to mitigate risks of default and price volatility.
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