Culled From From Huhuonline.com can authoritatively report that the state oil company, the Nigerian National Petroleum Corporation Limited (NNPCL), is in the final stages of sealing a $4.7 billion crude-for-loan agreement with Saudi Arabia’s Aramco; a landmark transaction that would rank as the company’s largest oil-backed financing deal to date, according to officials familiar with the negotiations. NNPCL sources who briefed Culled From From Huhuonline.com on conditions of anonymity, said the deal, negotiated quietly over nearly two years, is expected to be formally signed in the coming weeks, subject to final documentation and internal approvals on both sides. It is designed primarily to refinance the existing $3.3 billion “Project Gazelle” facility, while also providing fresh dollar liquidity to Nigeria’s strained energy and fiscal system.
What the Deal Involves
Under the structure, NNPC will pre-sell a portion of its future crude oil production to a Special Purpose Vehicle (SPV), which in turn raises financing from international lenders, with Saudi Aramco as the core counterparty. The proceeds are paid upfront to NNPC, while loan repayment is made through future crude oil deliveries. This deal is intended to refinance the existing $3.3 billion Project Gazelle loan and offers implications for Nigeria’s oil sector by providing liquidity and potentially stabilizing production.
Project Gazelle; first unveiled as a $3.3 billion facility, uses a conservative benchmark oil price of $65 per barrel and earmarks up to 90,000 barrels per day to service the debt. The new $4.7 billion arrangement expands that framework, rolling over the earlier $3.3 billion obligation and extending Nigeria’s access to hard-currency funding without an immediate cash outlay of $1.4 billion. NNPC says the proceeds will continue to be used to prepay taxes and royalties, fund operations, stabilize crude production, and bolster foreign-exchange inflows; a critical concern as Nigeria grapples with forex shortages and volatile oil receipts.
Why Project Gazelle Matters
A source close to President Tinubu who elected anonymity because he was not authorized to comment on the deal explained to Culled From From Huhuonline.com that for Nigeria, Project Gazelle is more than a loan; “it is a liquidity bridge.” Forward-sale financing allows NNPC to monetize future oil today, shoring up forex reserves and smoothing cash flows at a time when budget pressures and debt-service costs are rising.
The source dismissed concerns about the implications of the deal on future oil earning and their impact on federal allocations: “Let’s use a simple example to explain this: let us assume a loan of $100 million was given to NNPC to be repaid from 1 million barrels of future oil sales; the repayment would vary depending on the eventual price per barrel of crude oil. If the oil were sold at $150 per barrel, 1 million barrels would fetch $150 million, and the loan would be fully repaid with the excess proceeds going back to NNPC. However, if the oil were sold at $60 per barrel, 1 million barrels would only fetch $60 million, and the loan repayment would be lower.
“International banks have long used such structures in resource-rich but cash-constrained economies,” the source said, arguing that “Project Gazelle’s size, relative to Nigeria’s overall production and 35 billion barrels of proven reserves, limits its impact on long-term oil earnings, while improving near-term fiscal stability. If oil prices remain above the $65 benchmark, repayment would accelerate and any excess revenue from crude sales would flow back to NNPC. In that scenario, the deal could modestly support Nigeria’s external buffers and even ease concerns flagged by rating agencies about liquidity stress.”
What Could Go Wrong: Industry analysts however cautioned that the risk lies in oil prices falling below the conservative $65 benchmark. “If global crude prices slide sharply or remain depressed for an extended period, the value of the earmarked barrels would decline, slowing repayment and potentially tying up a larger share of future production for longer than planned,” one analyst pointed out. In such a downside scenario, he said, NNPC’s crude allocation to debt service could crowd out cash flows for other obligations. Also, pressure on forex inflows could intensify, undermining budget assumptions. And Nigeria’s already fragile credit profile could come under renewed scrutiny, especially if repayment timelines stretch.
The analyst noted that while forward-sale financing reduces immediate default risk, it transfers price risk into the future, leaving Nigeria exposed if oil markets turn decisively bearish, meaning that traders and investors broadly believe oil prices are likely to fall, and they are acting on that belief with conviction rather than caution. “In short, when oil markets turn decisively bearish, the consensus view shifts to prices are heading lower, and the risks are skewed to the downside. For oil-dependent countries like Nigeria or oil-backed financing arrangements like Project Gazelle, this is dangerous territory: falling prices reduce revenues, strain budgets, and can complicate debt repayment tied to future oil exports.”
Bigger Picture
The Aramco deal comes as Nigeria leans more heavily on structured oil-backed financing to navigate fiscal tight spots, even as it pushes for production recovery and sector reforms under the Petroleum Industry Act (PIA). Supporters see Project Gazelle as a pragmatic response to funding constraints; critics warn it reflects a deeper dependence on mortgaging future resources to solve today’s problems.
For now, the imminent signing of the NNPC–Aramco $4.7bn agreement offers short-term relief and a vote of confidence from the world’s largest oil company. Whether it proves a clever gazelle; nimble and forward-looking, or another sprint that leaves Nigeria breathless will ultimately depend on oil prices, discipline in execution, and how wisely the cash is used.
