The Nigerian National Petroleum Company Limited (NNPCL) has committed to supplying 272,500 barrels of crude oil per day to settle loans totaling $8.86 billion through a series of crude-for-loan agreements.
This means approximately 8.17 million barrels of crude oil will be used each month to fulfill various debt obligations.
This allocation is based on reports from the Nigeria Extractive Industries Transparency Initiative (NEITI) and NNPCL’s financial statement.
Key projects tied to these deals include Project Panther, Project Bison, Project Eagle Export Funding, Project Yield, and Project Gazelle. 
According to The PUNCH’s findings, as of now, NNPCL has repaid $2.61 billion of its total loan portfolio, leaving a balance of $6.25 billion.
Despite the total $8.86 billion credit facility, only $6.97 billion has been disbursed across seven crude-for-loan deals.
Major Projects
One of the major initiatives, Project Panther, is a joint venture between NNPCL and Chevron Nigeria Limited. This project secured a $1.4 billion loan, with 23,500 barrels per day (bpd) pledged for repayment.
Another significant deal, Project Bison, was part of NNPCL’s effort to acquire a 20% stake in the Dangote Refinery. Though the company secured only 7.25% equity, it took a $1.04 billion loan from Afrexim Bank, backed by 35,000 bpd.
Project Eagle Export Funding is split into three phases, the original of which secured a $935 million loan, fully repaid in 2023, with 30,000 bpd pledged.
Subsequent tranches also saw successful repayment, but $900 million from the third phase, Project Eagle Export Funding Subsequent 2 Debt, remains outstanding.
Additionally, Project Yield is designed to finance the Port Harcourt Refinery, with a $950 million loan tied to 67,000 bpd. Repayments for this project are set to begin in December 2024.
Lastly, Project Gazelle, aimed at stabilizing Nigeria’s foreign exchange market, secured a $3 billion forward sale agreement in December 2023, backed by 90,000 bpd from production sharing contracts. By the end of 2023, $2.25 billion had been drawn, with repayments expected to commence by mid-2024.
Challenges in Oil Production
These deals come at a time when Nigeria is grappling with declining oil production, having produced just 490.94 million barrels in 2022, the lowest in a decade. Though production improved to 537.57 million barrels in 2023, this still reflects a steep drop from the country’s peak in 2014.
The sector continues to face challenges, including unscheduled maintenance, repair issues, and oil theft, which deferred the production of 110.66 million barrels in 2023. Additionally, sabotage and theft led to a loss of 5.25 million barrels, compounding production struggles.
Despite these setbacks, President Bola Tinubu’s government has pushed for reforms in the oil sector, including allowing local refineries to purchase crude in naira, and commencing crude supply to the Dangote Refinery from October 2024.
These reforms are part of wider efforts to stabilize the nation’s economy, particularly following the removal of fuel subsidies.
In August 2023, NNPCL secured a $3.3 billion emergency loan from the African Export-Import Bank (Afrexim) under the Project Gazelle arrangement. The loan aims to stabilize Nigeria’s foreign exchange market and support the Central Bank of Nigeria in meeting its dollar obligations.
NNPCL has set a conservative benchmark of $65 per barrel for oil sales under the crude-for-loan agreements, ensuring financial stability and reducing the risk of default.
Repayments will be linked to future oil sales, using strategic pricing to mitigate volatility in global oil markets.
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