The Nigerian National Petroleum Company Limited (NNPC) has committed 272,500 barrels per day of crude oil in exchange for loans totaling $8.86 billion through a series of crude-for-loan agreements.
This commitment translates to roughly 8.17 million barrels of oil per month dedicated to various loan deals, as revealed by an analysis of reports from the Nigeria Extractive Industries Transparency Initiative and NNPC’s financial statements.
Some of the major initiatives financed by these deals include Project Panther, Project Bison, Project Eagle Export Funding, Project Yield, and Project Gazelle.
NNPC has already repaid $2.61 billion, or 29.4% of the total loan, leaving $6.25 billion outstanding. Of the $8.86 billion facility, $6.97 billion has been received so far across seven crude-for-loan agreements.
One key project, Project Panther, is a joint venture between NNPC and Chevron Nigeria Limited, secured through international and local banks. It obtained a $1.4 billion loan backed by 23,500 barrels per day (bpd), with repayments starting after a moratorium period. Financing terms include SOFR plus a 5.5% margin and a liquidity premium.
Project Bison involved NNPC’s acquisition of a 7.25% stake in the Dangote Refinery, backed by a $1.04 billion loan from Afrexim Bank with 35,000 bpd pledged. NNPC fully repaid this loan by June 2024.
Project Eagle Export Funding consisted of three loans. The initial $935 million loan, taken in 2020 and secured by 30,000 bpd, was repaid by September 2023. A second loan of $635 million was also repaid within the same period, while the third, worth $900 million and secured by 21,000 bpd, is set for repayment starting in June 2024, with full maturity expected by 2028.
Project Yield, aimed at revamping the Port Harcourt Refinery, was financed with a $950 million loan, secured by 67,000 bpd. The loan, obtained in 2022, will begin repayment in December.
Despite this, the refinery has yet to commence production as of August, with delays persisting despite assurances from the Federal Ministry of Petroleum Resources and NNPC.
Lastly, Project Gazelle was designed to stabilize Nigeria’s foreign exchange market. In December 2023, NNPC secured a $3 billion forward sale agreement, pledging 90,000 bpd from Production Sharing Contracts. By the end of 2023, $2.25 billion had been drawn, with repayments set to begin mid-2024.
These crude-for-loan arrangements come at a time when Nigeria is grappling with efforts to boost its oil production.
