Latest news with #Saudi-AfricanSummit
TimesLIVE
3 days ago
- Business
- TimesLIVE
Nigeria's $5bn oil-backed loan from Aramco 'delayed by oil price drop'
Nigeria and Saudi Arabian oil company Aramco are struggling to reach an agreement on a record $5bn (R88.63bn) oil-backed loan after a recent decline in crude prices sparked concern among banks that were expected to back the deal, four sources told Reuters. The facility would be Nigeria's largest oil-backed loan to date and Saudi Arabia's first participation of this scale in the country, although the decline in oil price could shrink the size of the deal, the sources said. Nigeria's President Bola Tinubu, two of the sources said, first broached the loan in November when he met with Saudi Crown Prince Mohammed bin Salman in Riyadh at the Saudi-African Summit. Details and progress on the loan talks have not been previously reported. The slow progress in discussions reflects the strain of the recent oil price drop, caused largely by a shift in OPEC+ policy to regain market share rather than curtail supply. Brent has fallen about 20% to around $65 per barrel from above $82 in January. 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. Tinubu sought approval for $21.5bn (R381.10bn) in foreign borrowing last month to bolster the budget, and the $5bn oil-backed facility under discussion with Aramco would be part of that, sources said.
Yahoo
3 days ago
- Business
- Yahoo
Nigeria's $5bn Aramco loan stalled by oil price dip
Nigeria and Saudi Arabian oil giant Aramco's discussions regarding a $5bn oil-backed loan have hit a snag following a significant drop in crude oil prices, reported Reuters, citing sources. The development has raised concerns among potential banks that were expected to support the agreement. The proposed facility represents Nigeria's largest oil-backed loan to date and Saudi Arabia's first major involvement in the country's financing. However, the recent decline in oil prices, with Brent crude falling around 20% to approximately $65 per barrel, from more than $82 in January, has cast doubt on the size of the deal. Nigerian President Bola Tinubu initiated the loan discussions during a meeting with Saudi Crown Prince Mohammed bin Salman at the Saudi-African Summit in Riyadh last November. The loan is intended to be part of a larger $21.5bn foreign borrowing plan proposed by Tinubu to support the national budget. The drop in oil prices has complicated the negotiations, as Nigeria may require a greater volume of oil to secure the loan. Banks expected to co-fund the loan alongside Aramco have expressed concerns about the reliability of oil delivery, which has slowed the progress of the talks. Gulf banks and at least one African bank are reportedly involved in the discussions, although their identities have not been disclosed. Saudi Aramco, Nigeria's state-owned oil company NNPC, and Nigeria's finance and petroleum ministries have not commented on the ongoing discussions. Nigeria, with a history of utilising and repaying oil-backed loans for various financial needs, would need to back the Aramco loan with at least 100,000 barrels of oil per day (bopd). The country is already using at least 300,000bopd to service existing oil-backed loans, with one such facility anticipated to be repaid this month. Furthermore, the lower oil prices necessitate NNPC to allocate more crude oil to joint venture partners, ranging from international companies such as Shell to local operators like Oando or Seplat, to cover operational costs. "You have to either find more oil, or find a way to renegotiate those deals," mentioned one of the sources. Nigerian trading firm Oando is expected to handle the offtake of the physical cargoes, although the company has not provided any comment. To alleviate the situation, NNPC is striving to boost output, and President Tinubu has issued an executive order to reduce production costs and increase revenue from oil and gas projects, potentially freeing up more funds from each barrel of oil. "Nigeria's $5bn Aramco loan stalled by oil price dip" was originally created and published by Offshore Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
