NNPCL’s Crude-for-Loan Burden Hits N8.07tn: Eagle, Gazelle, Yield Projects Drive Debt Exposure
The Nigerian National Petroleum Company Limited (NNPCL) is grappling with a staggering N8.07tn in crude-backed loan obligations, according to its 2024 financial statements. These debts are spread across multiple forward-sale and project-financing arrangements, including major facilities like Eagle Export Funding, Project Yield, Project Leopard, and Project Gazelle. The obligations are serviced primarily through crude oil and gas deliveries, highlighting the increasing reliance on forward-sale agreements as a key funding mechanism amid years of fiscal pressure and declining upstream investment.
Among NNPCL’s significant exposures is the Eagle Export Funding facility, where a $900m tranche secured in 2023 requires daily crude deliveries of 21,000 barrels. Other major arrangements include Project Yield, linked to the Port Harcourt Refinery upgrade, requiring delivery of 67,000 barrels per day, and Project Leopard, with a 35,000 barrels-per-day commitment. The most substantial debt, Project Gazelle, has drawn N4.9tn out of a N5.1tn facility, necessitating 90,000 barrels of daily crude deliveries until fully settled. Together, these projects account for 213,000 barrels of Nigeria’s daily crude output, raising concerns about long-term fiscal flexibility and export allocation.
The company’s debt structure is further complicated by gas-supply obligations under the Nigeria LNG (NLNG) financing arrangement, which saw N772bn advanced for future gas deliveries, with N472bn still outstanding by the end of 2024. These commitments have affected government revenues, with Nigeria’s gross profit from crude and gas sales falling by 43.3% to N1.08tn in 2024, despite a modest 12.6% increase in crude production to 442.21 million barrels. Analysts warn that opaque forward-sale agreements and crude-for-loan deals are tying up significant portions of the nation’s oil, limiting fresh fiscal inflows.
Experts like oil and gas strategist Ademola Adigun highlight the lack of transparency around these crude-for-cash arrangements, noting that forward-sale contracts divert oil from government revenue streams. Similarly, development economist Dr. Aliyu Ilias calls for a detailed study on how short-term crude transactions affect fiscal performance, while Dr. Muda Yusuf stresses the historical impact of past forward-sale agreements on current earnings. They emphasize that clarity in crude swap and forward-sale deals is critical for fiscal accountability and sustaining public trust.
Under the new leadership of CEO Bayo Ojulari, NNPCL has reportedly improved professionalism and transparency in its operations. However, the combination of historical forward-sale commitments, ongoing crude-for-loan agreements, and off-balance-sheet transactions continues to strain the company’s operational and fiscal flexibility. Observers argue that public disclosure of all crude-backed arrangements is essential to restore confidence in Nigeria’s oil revenue management and ensure that future production translates into tangible fiscal gains for the Federation.
source: Punch