The NNPC Limited (NNPC), has signed a five-year agreement worth $1.04 billion with the African Export–Import Bank (Afreximbank).
The deal, signed at the ongoing Intra-African Trade Fair (IATF) in Durban, South Africa, is to boost the Company’s oil export capacity, which will be repaid through crude supply to the bank.
About 25,000 barrels per day (bpd) of crude oil produced by the NNPC would be used to pay off the loan.
This arrangement is similar to what the NNPC has with some of its joint venture partners in which crude oil is used to meet its cash call debt obligations.
Afreximbank President, Prof. Benedict Oramah, at the signing of the loan agreement, said the deal would benefit Nigeria, while assuring that the bank would make funds available for similar projects across Africa.
About 25,000 barrels per day (bpd) of crude oil produced by the NNPC would be used to pay off the loan. This arrangement is similar to what the NNPC has with some of its joint venture partners in which crude oil is used to meet its cash call debt obligations.
Global oil market
Meanwhile, speaking on Bloomberg Television, the Group Managing Director/Chief Executive Officer, NNPC, Mele Kyari, had expressed concern about the ability of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) to ramp up production in the short term, as investment in the industry continues to wane.
OPEC has continued to stick with its agreed plan since July, to release an additional supply of 400,000 barrels every month to gradually return the cuts it embarked upon in the wake of the COVID-19 pandemic last year, despite promptings from the United States (U.S), India, Japan and other countries to supply more barrels.
Currently, the global oil market has a deficit of over 600,000bpd, a development that led to an increase in oil and gas prices and attendant inflationary pressures.
Despite the over 1.6 million bpd (mbpd) allocated to Nigeria in September and October, the country was only to supply 1.399 mbpd and 1.354 mbpd in September and October, respectively, on the back of weak infrastructure and sabotage.
Noting that although Nigeria has faltered in meeting its OPEC allocation, Kyari expressed optimism that by the end of the year, the country may be able to hit 1.8mbpd, excluding condensates.
“It’s very obvious that by the close of the year, we will get back to the 1.7 barrels to 1.8 barrels per day of crude oil. When I mention this figure, I am only talking about crude oil because we also produce condensates, and when you combine, we can easily hit 2.0 million barrels by the end of the year,” he said.
On the US plan to release oil from its special reserves, he argued that the volume would have to be very significant to make any long-term impact on global oil prices.
The IATF 2021 kicked off on November 15 is themed: “Building Bridges for a Successful AfCFTA, and has attracted thousands of visitors to the Durban International Convention Centre, venue of the fair.