The Nigerian government has officially denied reports that a $5 billion oil-backed loan deal with Saudi Arabian oil giant Aramco has collapsed, affirming that discussions are still ongoing despite recent challenges. The clarification came amid widespread media speculation following a significant drop in crude oil prices, which has complicated negotiations and raised concerns among banks expected to co-finance the loan.
According to multiple sources, including the Nigerian Ministry of Finance, no final decision has been reached on the proposed loan, which would be Nigeria’s largest oil-backed borrowing to date and mark Saudi Aramco’s first major financial engagement of this scale in Nigeria. Mohammed Manga, Director of Information and Public Relations at the Ministry of Finance, emphasized that market speculation is common during economic reforms and that reports suggesting the deal’s collapse are unfounded.
The loan discussions began in November 2024 when President Bola Tinubu met with Saudi Crown Prince Mohammed bin Salman at the Saudi-African Summit in Riyadh. The facility is intended to be backed by at least 100,000 barrels of Nigerian crude oil per day. However, the recent approximately 20% decline in Brent crude prices—from over $82 per barrel in January to around $65—has introduced complexities. Lower oil prices mean Nigeria may need to allocate more barrels to secure the same loan amount, but years of underinvestment in oil production have made meeting such targets difficult.
Banks involved in the financing, including Gulf lenders and at least one African bank, have expressed concerns about the reliability of oil deliveries, slowing the pace of negotiations. One source highlighted the difficulty in finding financiers willing to underwrite the loan under current market conditions.
Nigeria currently services about 300,000 barrels per day of crude oil to repay existing oil-backed loans, totaling approximately $7 billion over the past five years. The proposed $5 billion facility with Aramco would nearly double this amount. While the volume of oil allocated to loan repayments is fixed, lower crude prices extend repayment periods and increase operational costs, as the Nigerian National Petroleum Company (NNPC) must allocate more crude to joint venture partners to cover expenses.
Despite these hurdles, the Nigerian government remains committed to exploring innovative, transparent, and fiscally responsible financing strategies to optimize its oil assets, improve external liquidity, and strengthen macroeconomic stability. The $5 billion loan is part of a broader $21.5 billion foreign borrowing plan submitted by President Tinubu to the National Assembly to support the national budget.
In summary, while negotiations face delays and challenges due to market conditions, the Nigerian government insists that the Aramco oil-backed loan deal has not collapsed and remains under active discussion.
