A record $5 billion loan from Aramco, the Saudi Arabian state-owned oil company, to Nigeria has been threatened by a drop in crude oil prices and declining production, a report has revealed.
Reuters, in a report on Tuesday, said the recent drop in crude prices has raised concerns among banks expected to support the deal, while a reduction is now being mutedly considered.
According to the report, slow progress in talks highlights the impact of the recent drop in oil prices, driven largely by the Organisation of Petroleum Exporting Countries and allies (OPEC+) policy shift aimed at regaining market share instead of limiting supply, which will now require more barrels to back the loan.
“Brent has fallen about 20% to around $65 per barrel from above $82 in January,” the report stated.
“A lower oil price means Nigeria could need more barrels to back the loan, but years of under-investment are complicating its ability to meet production goals.”
Sources also told Reuters that banks involved in the discussions, expected to co-fund part of the loan alongside Aramco, have voiced concerns about oil delivery, which has slowed negotiations.
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“Gulf banks and at least one African lender are involved, they added. Reuters could not establish the banks’ identities,” it added.
The Nigerian National Petroleum Company Limited (NNPC Ltd) has secured several oil-backed loans, including a $3 billion loan from the African Export-Import Bank (Afreximbank) to support the naira and stabilise the foreign exchange market.
President Bola Tinubu, the sources said, introduced the loan idea in November 2024 during his meeting with Mohammed bin Salman, Saudi Arabia’s crown prince and prime minister, at the Saudi-African Summit in Riyadh.
However, Aramco and NNPC have refused to comment on the matter.
Officials in the finance or petroleum ministries have also maintained sealed lips on the loan agreement.
By: Babajide Okeowo
https://www.ripplesnigeria.com/crude-price-slump-low-production-threaten-saudi-oil-firms-5bn-loan-to-nigeria/
