NNPC’s Forward Oil Sales Reach $21.5bn in Six Years, Affecting Domestic Crude Obligations
*11 deals have been engaged in by the NNPC since 2019
Forward crude sales by the Nigerian National Petroleum Company Limited (NNPC), have reached $21.565 billion since 2019, further buttressing why it’s almost impossible for the national oil company to meet its Domestic Crude Supply Obligation (DCSO) to local refiners.
The document obtained from impeccable sources indicated that since the controversial ‘Project Gazelle’ in 2023, the NNPC has gone into at least two other agreements, tagged ‘Project Leopard’ and ‘Project Gazelle II’, which will cost the company $2 billion and $7.5 billion respectively.
It’s unclear the quantity of crude oil that has been mortgaged, but the information available to THISDAY showed that 11 deals have been entered into by the NNPC since 2019, excluding the Dangote refinery’s arrangement, which it eventually opted out of.
However, aside from the vendor programmes of $750 million and $1.5 billion which expired in May 2023 and November 2024 respectively, the final maturity dates for the nine other projects continue to run.
Other extant facilities which have yet to reach maturity include: The $3 billion deal on NLNG Train 7, which matures in May 2029; the $1 billion ‘Project Eagle’ agreement which expires in June 2025 and the $300 million ‘Project Brogue’ which has a final maturity of January 2027.
Besides, ‘Project Bison’ which was entered into in 2021 worth $1.040 billion, expires in December 2026; ‘Project Yield’ which was sealed in 2022, valued at $1 billion, expires in June 2029; while a project codenamed ‘Offtake Financing’ costing $75 million expires in October 2029.
Furthermore, ‘Project Gazelle’, an oil swap deal valued at $3.4 billion, is expected to expire in 2032. The deal which led to serious public conversations on the transparency of such agreements was struck in 2023.
But since then, THISDAY gathered that the NNPC had entered into two more deals, namely: Project Leopard and Project Gazelle II, meant to be repaid fully in January 2029 and April 2034 respectively. While Project Leopard is valued at $2 billion, Project Gazelle II, will take the lion’s share at $7.5 billion.
Despite the closeness of Afreximbank to the actors, it was understood that the continental bank declined to participate in the new deals based on their own rule books and their current debt-for-oil exposure to the NNPC.
Afreximbank was said to have mentioned that they, at $4.5 billion, had reached their limit on granting PXF (Pre-export financing) resource-backed loans to NNPC.
PXF is a type of financing where a commodity producer gets upfront cash from a customer in exchange for a future delivery of the commodity, potentially at a discount. The producer uses the cash to fund their operations, and the buyer gains access to a future supply of the commodity.
“One of the pre-conditions for the 2023 Gazelle deal is that NNPC was not going to raise new USD financing until the principal with interest is fully drawn down. Afrexim did not participate in the $2 billion Project Leopard deal raise,” the document stated.
It added that for the $7.5 billion deal, Saudi Aramco or Abu Dhabi‘s ADNOC will likely be involved, with the ‘strike price’, much lower than the market price of crude oil.
“Afrexim is unlikely to be an underwriter or a syndicate in the Gazelle II deal (that is most likely going to feature ADNOC or Aramco).
“The barrels are structured at a strike price that is below the open market rate, and is not only in complete variance of what it will cost to repay in principal plus interest, but the difference between the strike price and open market rate is actually credited to an offshore debt service reserve account that is neither subject to oversight or appropriated by the National Assembly into the CRF (Consolidated Revenue Fund).
