Falling oil prices are making it tough for Aramco and the Nigerian government to finalize a record $5 billion loan agreement. The loan, backed by oil, was agreed upon by Saudi Arabia's state oil giant to support Africa's largest oil producer. Nigeria is already using a significant portion of its daily oil production to repay existing oil-backed loans.
This new loan would be the largest of its kind for Nigeria and marks a significant partnership between Saudi Arabia and the African OPEC producer. However, the 20% decline in oil prices since January has stalled negotiations. With lower oil prices, Nigeria would need to pledge more oil production to secure the $5 billion loan - potentially up to 100,000 barrels per day.
The challenge is that Nigeria has been struggling to boost its oil production due to issues like oil theft and pipeline vandalism. Despite efforts to clamp down on these problems, the country's oil output remains below its OPEC quota.
Recently, the Nigerian government urged oil companies to collaborate to increase production. The Minister of State for Gas reported that Nigeria's crude oil production averaged 1.4 million barrels per day in the first quarter, falling short of the 1.8 million barrels per day OPEC quota.
There are signs of potential growth, though. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced that ExxonMobil plans to invest up to $1.5 billion in deepwater oil and gas exploration and development offshore Nigeria. This move could help boost Nigeria's oil production and support the country's economic growth.
Source: https://oilprice.com/Latest-Energy-News/World-News/Saudi-5-Billion-Loan-to-Nigeria-Hangs-in-the-Balance-as-Crude-Prices-Plunge.html