Nigeria and Saudi oil giant Aramco are facing difficulties finalizing a $5 billion oil-backed loan, as falling crude prices have made banks wary of supporting the deal.
If successful, the loan would mark Nigeria’s largest oil-backed borrowing and Aramco’s biggest financial involvement in the country to date. However, the recent drop in oil prices may reduce the deal’s total value, sources indicated.
President Bola Tinubu introduced the idea during a November meeting with Saudi Crown Prince Mohammed bin Salman at the Saudi-African Summit, two sources revealed. Until now, no public information existed on the details or current status of the discussions.
Talks have slowed due to the financial pressure created by lower crude prices, largely caused by OPEC+ shifting strategies to increase market share rather than limit output.
Brent crude has plunged roughly 20%, falling from over $82 in January to about $65 per barrel. With lower prices, Nigeria may need to pledge more oil to secure the same loan value. But years of low investment have hampered the country’s ability to hit production targets.
Last month, Tinubu requested approval to borrow $21.5 billion from foreign lenders to support the national budget. The proposed $5 billion deal with Aramco would form a part of that total, sources confirmed.
Banks expected to co-finance the loan with Aramco have raised doubts about Nigeria’s ability to supply the oil needed, causing further delays in the process.
source: www.zawya.com
African Energy Council