By Adedapo Adesanya
The Nigerian National Petroleum Corporation (NNPC) has signed a five-year agreement worth $1.04 billion with the African Export–Import Bank (Afreximbank).
The deal meant for trade financing was signed at the ongoing Intra-African Trade Fair (IATF) in Durban, South Africa.
The oil trade financing deal is for the export of the crude produced by the NNPC, and the repayment process would be through crude supply to the bank.
The arrangement is similar to what the NNPC has with some of the joint venture companies in which crude oil is used to net off its cash call debt obligations.
About 25,000 barrels per day of crude oil produced by the NNPC would be used to net off the loan.
During the signing of the loan agreement, the President of the bank, Mr Benedict Oramah, stated that the deal would benefit Nigeria and promised that the bank would make funds available for similar projects across Africa.
The IATF 2021 kicked off on November 15 with the theme Building Bridges for a successful AfCFTA and has so far attracted thousands of visitors to the Durban International Convention Centre where it’s taking place.
Meanwhile, speaking on Bloomberg Television, the Managing Director of the state oil corporation, Mr Mele Kyari also raised doubts about the ability of the producers’ group known as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) to ramp up production in the short term as an 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, India, Japan and other countries to supply more barrels.
Currently, the global oil market has a deficit of over 600,000 barrels per day, a development that has led to an increase in oil and gas prices and brought along attendant inflationary pressures.
Despite the over 1.6 million barrels per day allocated to Nigeria in September and October, the country was only to supply 1.399 million barrels per day and 1.354 million barrels in September and October respectively on the back of weak infrastructure and sabotage.
Mr Kyari argued that the plan by the United States to release oil from its special reserves has to be very significant to make any long-term impact on global oil prices, explaining that although Nigeria has faltered in meeting its OPEC allocation, by the end of the year, the country may be able to hit 1.8 million bpd, 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 stressed.
Modupe Gbadeyanka