NNPCL Struggles with N8.07tn Crude-for-Loan Debt Amid Fiscal Pressure
The Nigerian National Petroleum Company Limited (NNPCL) is grappling with massive crude-backed loan obligations estimated at N8.07 trillion, according to a detailed analysis of its 2024 financial statements and capital-commitment disclosures. These liabilities, arising from multiple forward-sale and project-financing agreements, are structured to be serviced through significant deliveries of crude oil and gas.
Over the years, these arrangements have become a critical part of NNPCL’s funding strategy, compensating for fiscal pressure, volatile crude production, and declining upstream investment. Many of the loans were used to refinance previous debts, fund refinery rehabilitation, support working capital, and meet government revenue obligations.
One of the key exposures is the Eagle Export Funding arrangement, which requires NNPCL to deliver at least 1.8 million barrels per cycle. The facility is split into three tranches, of which the Project Eagle Export Funding Subsequent 2 Debt, valued at $900 million, remains outstanding. This tranche, secured in 2023 against 21,000 barrels per day, has repayments scheduled to start in June 2024 and mature by 2028. As of December 2024, the outstanding balance stood at N1.1 trillion, making it one of the company’s largest forward-sale exposures.
NNPCL’s financial statements describe the Eagle arrangement as a Forward Sale Agreement, under which Eagle Export Funding Limited makes upfront payments for crude to be delivered according to a set schedule. The company must ensure timely deliveries to fulfill the contract.
Another significant obligation stems from the incremental gas-supply financing agreement with Nigeria LNG Limited (NLNG). Under this arrangement, NLNG provided upfront funding of N772 billion for gas deliveries. By the end of 2024, gas worth N535 billion had been drawn, and N312 billion recovered, leaving N460 billion yet to be supplied. Financing charges of N12 billion accrued, bringing the total outstanding balance to N472 billion.
Refinery rehabilitation projects account for some of NNPCL’s largest crude-backed commitments. Project Yield, which supports the Port Harcourt Refinery upgrade, had an outstanding drawdown of N1.4 trillion as of December 2024. The loan requires NNPCL to deliver refined-product-equivalent volumes of 67,000 barrels per day, with principal repayment starting in June 2025 after a two-and-a-half-year moratorium.
Similarly, Project Leopard carries a N1.3 trillion debt commitment and requires the company to deliver 35,000 barrels per day over five years, with repayments beginning mid-2025 following a six-month moratorium.
The most substantial exposure comes from Project Gazelle, a large crude-for-cash facility used to fund advance tax and royalty payments on Production Sharing Contract (PSC) assets. As of December 2024, NNPCL had drawn N4.9 trillion of the N5.1 trillion facility. Deliveries worth N991 billion had been completed, leaving an outstanding N3.8 trillion, requiring sustained deliveries of 90,000 barrels per day until fully settled.
In total, NNPCL’s four main crude-for-loan facilities—Eagle Export Funding (21,000 bpd), Project Yield (67,000 bpd), Project Leopard (35,000 bpd), and Project Gazelle (90,000 bpd)—represent a combined commitment of 213,000 barrels per day, in addition to gas obligations under the NLNG arrangement. This volume accounts for a substantial portion of Nigeria’s daily crude output, highlighting long-term implications for government revenue, export allocations, and operational flexibility.
Despite these efforts, Nigeria’s oil earnings remain under pressure. According to the 2024 Budget Implementation Report, gross profit from crude and gas sales dropped by N824.66 billion, falling to N1.08 trillion from N1.90 trillion in 2023—a 43.32% decline. This performance was also 26.3% below the budgeted target of N1.46 trillion. Crude output averaged 1.43 million barrels per day, short of the 1.78 million bpd target, due to lingering infrastructure constraints, under-investment, and crude theft.
The World Bank noted that despite the removal of petrol subsidies in October 2024, NNPCL remitted only 50% of the revenue gains from crude sales, using the remainder to offset past debt arrears. Out of N1.1 trillion revenue, only N600 billion was transferred to the Federation, leaving N500 billion unaccounted for.
Experts warn that opaque crude-for-loan arrangements and undisclosed forward-sale commitments have tied up significant portions of Nigeria’s crude output, limiting fiscal flexibility. Oil and gas consultant Ademola Adigun emphasized that many barrels were already committed to debt settlements, reducing fresh revenue inflows. Development economist Dr Aliyu Ilias highlighted the need for a thorough study to assess the fiscal impact of crude swaps and short-term forward-sale transactions.
Dr Muda Yusuf of the Centre for the Promotion of Private Enterprise noted that forward-sale deals signed during former CBN Governor Godwin Emefiele’s tenure continue to consume current earnings. However, he commended the current NNPCL management under Bayo Ojulari for improved professionalism and transparency, urging full disclosure of crude swap and forward-sale agreements to restore confidence in oil revenue reporting.
