Nigeria’s decision to refinance the $3.3bn Project Gazelle oil-backed facility will reduce the amount of crude committed to debt repayment by 11,250 barrels per day, potentially giving the government greater room to supply domestic refineries and generate foreign exchange.
The National Economic Council approved the restructuring of the facility at its meeting chaired by Vice President Kashim Shettima, with the daily crude commitment expected to fall from 90,000 barrels to approximately 78,750 barrels.
The original Project Gazelle arrangement, secured in 2023, was designed to provide financing backed by future crude oil production. NNPC had committed 90,000 barrels of crude per day from Production Sharing Contract assets toward repayment of the facility.
Under the new arrangement, known as Project Gazelle II, the Federal Government plans to refinance about $1.5bn outstanding from the original facility through a new $4.5bn financing package. The restructuring is also expected to provide an additional $3bn in liquidity, which the government says will support external reserves and fiscal and infrastructure priorities.
The reduction in the daily crude commitment means more oil will become available for other purposes. Based on the original repayment period, the lower allocation could release roughly 13.7 million barrels of crude over the remaining 40 months.
The additional barrels could be exported to generate foreign exchange or supplied to local refineries, including the Dangote Petroleum Refinery and other domestic processing facilities.
However, the lower daily repayment rate could also extend the period over which Nigeria remains tied to the facility.
An analysis based on the existing repayment obligation indicates that maintaining the same total crude repayment volume at 78,750 barrels per day could push the completion period from the previously projected December 2029 to around June 2030.
The estimate is not an officially announced maturity date. It assumes that the total crude obligation remains unchanged and that the reduction in daily crude allocation is the major change under the refinancing arrangement. Any adjustment to interest payments, repayment schedules, facility tenor or the total amount owed could produce a different outcome.
Energy consultant Kelvin Emmanuel criticised the refinancing, arguing that Project Gazelle II could create additional financial burdens for Nigeria while lacking sufficient transparency.
Emmanuel questioned the need for a new oil-backed financing arrangement when the country already has mechanisms for servicing the original facility. He also raised concerns about the reported structure of the transaction, including fees and an offshore debt service reserve account.
He argued that Nigeria should not incur significant new costs at a time when its sovereign credit position has improved and called for greater disclosure of the terms of the agreement.
Professor of Energy at the University of Lagos, Dayo Ayoade, offered a more balanced assessment, noting that the refinancing could provide immediate benefits by freeing up crude oil and potentially reducing financing costs.
According to Ayoade, the additional crude could be sold internationally for foreign exchange or supplied to domestic refineries. However, he warned that extending the repayment period would leave Nigeria exposed to future changes in crude production and international oil prices.
He also stressed the need for greater transparency around Nigeria’s oil-backed borrowing arrangements, particularly the volume of crude production already committed to creditors.
The concerns come against the backdrop of Nigeria’s increasing reliance on crude-backed financing to raise liquidity. According to NNPC’s 2024 financial statements, crude worth about N991bn had been used to service part of its forward-sale loan from Afreximbank during the year.
The report indicated that about N4.9tn had been drawn from an available N5.1tn facility, while the outstanding balance stood at approximately N3.8tn at the end of 2024.
Oil-backed borrowing provides governments with immediate access to funds but also commits future crude production to debt repayment. For Nigeria, this can limit the quantity of oil available for direct sales and domestic refining, particularly as the country seeks to increase production and expand its refining capacity.
The Project Gazelle refinancing therefore provides a short-term advantage by releasing more crude for government use, but its longer-term impact will depend on the final repayment terms, financing costs and the amount of crude ultimately required to settle the new facility.
Until the complete refinancing agreement is made public, the projected June 2030 completion date remains an estimate rather than a confirmed repayment deadline.
