Port Harcourt refinery revamp soaks up N1.7tn under Project Yield
Project Gazelle, Leopard push crude-for-cash obligations up
Fresh refinery stakes deepen long-term liabilities
The Nigerian National Petroleum Company Limited (NNPC Ltd) has committed more than N9 trillion across forward-sale deals, pre-export financing structures and refinery-linked obligations, effectively encumbering significant volumes of Nigeria’s future oil output to meet current funding needs.
The company’s 2024 Audited Financial Statement (AFS) released on Monday showed an aggressive use of crude-for-cash arrangements in the last couple of years, with three major projects: Yield, Gazelle and Leopard accounting for more than N6.9 trillion.
Nigeria, heavily reliant on oil revenue, has increasingly used forward sales agreements to secure immediate cash, often to fund budget deficits or finance critical projects. In a forward sale, NNPC agrees to deliver a certain volume of crude in the future at a price agreed today.
However while this practice provides short-term liquidity, it has significant downsides, including
revenue risk, production pressure as well as having a debt-like impact, meaning that forward sales act like borrowing against future oil revenue.
To the credit of the current management of the national oil company, this is perhaps the first time that all NNPC’s commitments in terms of crude oil forward sales are coming to the public, indicating an attempt at openness.
But combined with refinery equity commitments and NLNG-related financing, NNPC’s forward liabilities now stretch several years into the future, backed primarily by crude streams from Joint Ventures and Production Sharing Contract (PSC) assets.
A THISDAY analysis of the company’s audited annual report for 2024 indicated that the NNPC’s crude-backed borrowing has intensified since 2020, when forward sales became its preferred tool for settling legacy debts, securing refinery rehabilitation funds and pre-paying tax obligations to the federal government.
For instance, the report revealed that the company drew N1.4 trillion from the N1.5 trillion Project Yield facility obtained in October 2022. The loan, backed by 67,000 barrels per day, is tied to the rehabilitation of the Port Harcourt Refinery under an Engineering, Procurement and Construction (EPC) contract with Tecnimont. Repayment began in June 2025, according to the report, after a 30-month moratorium.
Interestingly, the refinery for which the huge sum was incurred is currently shut despite numerous rehabilitation efforts. The NNPC this week announced that it was searching for new equity partners to ‘highgrade’ or ‘repurpose’ the facility.
According to the AFS, there is also an additional N77 billion approval for a 10 per cent equity stake in the African Refinery Port Harcourt Limited (ARPHL), which the NNPC plans to increase to 15 per cent through an extra 5 per cent “sweat equity”. The project, still undergoing Front End Engineering Design (FEED) review, targets completion in 2028.
Besides, one of the biggest forward-sale deals during the period was Project Gazelle, signed in December 2023 to raise N2.7 trillion but expanded to N5.1 trillion. The agreement requires NNPC to supply 90,000 barrels of crude per day from PSC assets for five years.
As of December 2024, NNPC had drawn N4.9 trillion, representing 96 per cent of the total facility. However, only N991 billion worth of crude has been delivered as of December 31, 2024, leaving a balance of N3.8 trillion to be paid through future crude shipments.
Effectively, more than two-thirds of the crude volumes tied to the deal remain committed, indicating a multi-year mortgage on PSC barrels, a review of the information showed.
Similarly, the NNPC also entered a new forward-sale arrangement tagged Project Leopard in December 2024. The deal secured a N3.1 trillion in funding, tied to the supply of 35,000 barrels per day of crude over five years.
The audited report showed a drawdown of N1.3 trillion in 2024, with repayments beginning in June 2025 after a six-month moratorium. The interest rate is pegged to three-month Secured Overnight Financing Rate (SOFR) plus a 6.5 per cent margin and a liquidity premium.
Further checks showed that with Project Gazelle and Project Leopard alone, NNPC has tied up 125,000 barrels per day of future production for debt settlement, the reason why raising crude production has become almost an emergency.
Yet, the financial report revealed that the incremental gas supply agreement involving NLNG and NNPC/NEPL carried a total financing of N772 billion. By December 2024, NNPC had drawn N535 billion, while NLNG had recovered N312 billion worth of gas. This left an outstanding balance of N460 billion, representing about 60 per cent of the gas yet to be delivered to NLNG. A financing charge of N12 billion was also recorded for the 2024 period.
In the same vein, NNPC accepted a 10 per cent sweat-equity stake in the proposed 20,000bpd Clairgold refinery in Delta State and has committed to an additional 10 per cent financial equity once the plant expands to 50,000bpd.
The project, with a capital cost estimated at N523 billion, also remains at FEED stage, with completion targeted for December 2027.
The financial statement reaffirmed that outstanding liabilities under the older PX1 and PX2 pre-export financing schemes were cleared through crude forward sales to Eagle Export Limited worth N1.1 trillion. However, NEPL is still obligated to nominate at least 1.8 million barrels per delivery cycle under the forward-sale schedule dating back to 2020, it stated.