A $5 billion oil-backed loan deal between Saudi oil giant Aramco and the Nigerian government is now in limbo, following a sharp drop in global crude oil prices, Reuters reported on Tuesday.
The proposed facility, which would be the largest oil-backed loan in Nigeria’s history and Saudi Arabia’s most significant financial engagement with the African OPEC member, has hit a roadblock as oil prices have fallen by 20% since January.
According to sources familiar with the matter, the plunge in prices has complicated negotiations, as Nigeria would now need to commit more oil to secure the loan, potentially over 100,000 barrels per day (bpd).
Heavy Oil Commitments, Struggling Output
Nigeria is already using at least 300,000 bpd to service existing oil-backed loans managed by the Nigerian National Petroleum Company Limited (NNPC). Adding another 100,000 bpd to this burden could stretch the country’s oil resources thin—especially as Nigeria has been struggling to meet its OPEC production quota of 1.8 million bpd, managing only an average of 1.4 million bpd in Q1 2025.
Calls to Boost Production Amid Persistent Challenges
In light of the shortfall, the Nigerian government has been urging international and local oil firms to collaborate in ramping up output. Minister of State for Gas, Ekperikpe Ekpo, emphasized this push at a recent industry conference, lamenting Nigeria’s consistent underperformance within OPEC.
Despite government crackdowns, oil theft, pipeline vandalism, and insecurity continue to hamper production—issues that have driven major oil firms to scale back or exit their onshore operations in Nigeria. These challenges frequently trigger force majeure declarations at major crude export terminals, disrupting supply chains and investor confidence.
Glimmers of Hope in Offshore Investment
Amid the turbulence, there are signs of renewed investment. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently confirmed that U.S. oil major ExxonMobil plans to invest up to $1.5 billion in offshore deepwater exploration and development—a move seen as critical to reviving Nigeria’s output potential.
However, whether this future investment can support the immediate demands of an oil-backed $5 billion loan remains uncertain, especially with falling oil prices putting Nigeria’s collateral capacity under pressure.
As it stands, the Saudi loan deal remains uncertain, pending clarity on oil price stability and Nigeria’s ability to scale up reliable crude output.
