June 10, (THEWILL) – The recent drop in crude oil prices has affected a proposed loan deal between Nigeria and the Saudi Arabian oil company, Aramco.
According to Reuters, the $5bn facility, said to be Nigeria’s largest oil-backed loan, is being threatened as banks expected to back the deal are raising concerns about a drop in crude oil prices.
The report said President Bola Tinubu had in November approached Saudi Crown Prince, Mohammed bin Salman, in Riyadh, at the Saudi-African Summit for the facility.
According to the proposal, the $5 billion Aramco loan would be backed by at least 100,000 barrels per day of oil.
However, the banks involved in the talks that are expected to co-fund part of the loan with the creditor, Aramco, have expressed concerns about oil delivery, which has slowed discussions, the report stated.
The slow progress in discussions reflects the strain of the recent oil price drop, caused largely by a shift in OPEC+ policy to regain market share rather than curtail supply.
Brent has fallen about 20% to around $65 per barrel from above $82 in January. A lower oil price means Nigeria could need more barrels to back the loan, but years of under-investment are complicating its ability to meet production goals.
“It’s hard to find anyone to underwrite it”, one source said, citing concerns over the availability of the cargoes.
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