How a state oil company’s scramble for refinancing in Riyadh – and Petrobras’s tentative re-entry – expose the paradox at the heart of Nigeria’s energy policy: great potential, shaky finances, and political risk concentrated in a single office.
The moment: a national oil company in a global lobby
In late 2025, the Nigerian National Petroleum Company Limited (NNPCL) quietly intensified a campaign that would once have been conducted behind closed doors: it began courting financiers and oil-market actors in the Gulf, scouting Riyadh for capital and credit lines. The move was not a routine funding exercise. It was a tacit admission that Nigeria’s flagship energy vehicle — the corporation designed to convert the country’s hydrocarbon bounty into national prosperity — was running short of the liquidity needed to keep oil flowing, refineries fed and policy promises afloat. Africa Intelligence reported the outreach as a “new refinancing campaign,” with NNPCL actively engaging Saudi institutions and trading houses in search of funds.
That scramble coexists with other vivid signals: in mid-2025 Abuja negotiated, with mixed results, a proposed $5 billion oil-backed loan from Aramco that was later delayed amid depressed oil prices and lender concerns; Afreximbank and oil traders have been pressed into service in prior years to provide crude-backed prepayment facilities; and NNPCL has been allocating millions of barrels of crude to the Dangote Refinery in a crude-for-naira arrangement meant to buttress domestic refining. Together these episodes reveal a company reliant on ad-hoc, often expensive, financing structures to manage cash-flow and sovereign commitments.
But these are not just accounting problems. They are political problems — because the man at the top of both the political and petroleum ladders in Nigeria is President Bola Ahmed Tinubu, who concurrently serves as Minister of Petroleum Resources. That concentration of authority turns routine commercial choices into questions of governance, patronage, and geopolitics. The implications for Nigeria’s fiscal health and for Tinubu’s political standing are far from trivial.
A short history of refinancing: from Afreximbank to oil traders
To understand the present, one must trace how NNPCL has been financed in recent years. After subsidy removals and policy shifts left the public purse exposed, Nigeria turned increasingly to prepayment facilities and crude-backed loans to raise hard currency. In 2023–24 Afreximbank led a syndicated prepayment facility of about $3.3 billion for NNPCL, tapping oil traders to underwrite part of the arrangement. Subsequent tranches brought the disbursed total close to $3.175 billion; a feature of the “Project Gazelle” facilities aimed at shoring up fiscal liquidity and stabilizing the naira.
Parallel to these bank-led instruments has been a pattern of one-off deals: Nigeria has explored oil-backed loans with major national oil companies such as Saudi Aramco. Talks of a $5 billion Aramco facility – effectively an advance payment for future crude – made headlines in 2025 but stalled after lenders grew uncomfortable with the macroeconomic risk posed by falling oil prices and fluctuating production estimates. The pattern is now familiar: when normal sovereign borrowing markets are tight or prohibitively expensive, a resource producer can sell forward future output to secure liquidity today – but at the cost of future revenues and added conditionality.
There is also the crude-for-naira initiative with Dangote Refinery, a flagship domestic policy that allocated more than 112 million barrels from December 2023 through September 2025 to ensure feedstock for local refining and to anchor a domestic fuel ecosystem. Politically popular as a pillar of energy security, the deal nonetheless strained NNPCL’s export availability and placed further emphasis on the company’s ability to balance immediate domestic needs against sovereign revenue flows.
Taken together, these financing moves depict a state oil company that has increasingly relied on leveraging its future output to solve present-day fiscal problems; a high-risk, short-term strategy during a period of price volatility and rising international skepticism about fossil-fuel lending.
Why Riyadh? Why Petrobras? The geopolitics of partners
NNPCL’s outreach to Saudi institutions is logical in one sense: Riyadh controls vast capital pools and an ecosystem of oil finance that is comfortable underwriting energy projects. Saudi companies and banks also have a political interest in cultivating ties with Nigeria, Africa’s largest oil producer by reserves in many assessments, and a significant swing influence in global energy diplomacy. But courting Riyadh also brings trade-offs:
• Geopolitical alignment. Deep financial links with Saudi entities can complicate Nigeria’s relationships with other major partners, notably Western banks, the U.S., and European investors who are increasingly scrutinizing hydrocarbon finance for climate risk and governance standards.
• Commercial terms. Oil-backed facilities negotiated under duress (when a borrower urgently needs funds) often carry less favorable terms than market offerings, including steeper forward prices, shorter tenors, or governance conditions that reduce national flexibility.
• Risk of sovereign exposure. The more future barrels are pledged in prepayment deals, the tighter Nigeria’s fiscal space becomes when prices fall or output slips.
At the same time, Tinubu’s visit to Brasilia in August added another twist: Petrobras — Brazil’s state-owned energy champion — signaled willingness to re-enter the Nigerian market after a five-year hiatus. Petrobras brings technical skills in deepwater exploration and gas monetization that Nigeria needs if it is to convert its estimated 210 trillion cubic feet of gas into domestic industry and export revenue. Brazilian and Nigerian officials signed five memoranda of understanding covering broad cooperation, with President Tinubu enthusiastically urging Petrobras’s “quick return.”
A Petrobras partnership is attractive for three reasons. First, it promises technology and operational expertise in high-risk deepwater developments where Nigeria’s major IOCs have sometimes been wary. Second, it diversifies international partnerships beyond the usual Anglo-Dutch-American league of oil majors. Third, a successful Petrobras engagement could unlock gas projects needed for domestic industrialization and export pipelines such as the African Atlantic Gas Pipeline concept.
Yet Petrobras’s return is conditional: it will look for policy stability, contractual clarity, and a reliable fiscal and foreign-exchange regime. In other words, the technical fix cannot substitute for structural reform. Without transparency and predictability, Brazil’s state champion – like any sophisticated operator – will hesitate to commit tens of billions to long-term projects.
The Tinubu dilemma: minister, president, and political risk
The political geometry of these deals matters because President Tinubu also holds the petroleum brief. That duality concentrates decision-making power in a single office: approvals of major deals, terms of crude allocation, negotiation posture with foreign partners and lenders, and oversight of NNPCL all sit within the president’s purview.
There are three immediate governance concerns.
First, conflicts of interest and accountability. When the same individual sets policy and oversees its operational delivery through a state-owned enterprise, lines of accountability blur. Decisions that should be adjudicated across ministries, technical agencies and independent oversight bodies risk being centralized and personalized. That matters for investor confidence and for civil-society scrutiny.
Second, political exposure to failure. If an Aramco loan collapses, or if a Petrobras partnership sputters due to regulatory ambiguity, the political fallout will be personalized. Tinubu’s government could find itself blamed for mortgaging future output or for failing to secure tangible investments, undermining a presidency that came to power promising economic competence and “renewed hope.”
Third, strategic trade-offs between short-term liquidity and long-term sovereignty. Rollovers and prepayments patch budget holes today, but they reduce crude available for future auctions, limit export flexibility, and can raise the specter of conditionalities that impinge on national decision-making. With Tinubu steering both the political and petroleum ships, the temptation to prioritize visible short-term gains over durable structural reforms is politically seductive, and fiscally perilous.
Economic risks: FX scarcity, debt rolls and the oil price hangover
Nigeria’s macro picture intensifies the urgency. Although crude prices had recovered from depressed levels in previous years, the oil market remains volatile. When prices slump, forward sales and oil-backed prepayments lose their buffer, and lenders grow jittery – a factor that scuppered parts of the Aramco negotiations in mid-2025.
Foreign-exchange scarcity amplifies the problem. Even if traders or banks extend credit, converting local proceeds into dollars for international obligations remains complicated in a regime of currency controls and an often-thin official FX market. That tension helps explain why NNPCL and the federal government have used crude-for-naira swaps and syndicated oil financings: these mechanisms were engineered to ease FX pressure and support the naira. But they also shift liquidity strain onto future budgets, creating a treadmill of refinancing.
Debt sustainability becomes a question of timing. If the crown jewel of national revenue — crude exports — are repeatedly pledged forward, and the domestic economy remains underperforming, the state risks a debt profile that constrains public investment and social spending. For a country of Nigeria’s size and demographic dynamism, that is an economic and social hazard.
Governance reform: the missing ingredient
Technical partnerships, whether Saudi financing or Petrobras expertise, will matter little unless they are embedded in broader governance reforms. Investors demand transparent contracting, clear local-content rules, reliable dispute-resolution frameworks and predictable fiscal terms. Nigeria’s history of contract disputes, combined with a tendency for policy oscillation, has deterred some long-term investments even when resource potential is high.
Reform implies: clearer ring-fencing of state-owned enterprises, competitive procurement practices, independent oversight of major deals, and a transparent account of how crude allocations (such as those to Dangote) affect export revenues. A robust institutional architecture would protect both national interests and the credibility of incoming partners. Without it, the nation risks swapping one form of dependency for another.
Strategic options for Tinubu and the country
Faced with this tightrope, Abuja has a constrained menu:
1. Use refinancing to buy time — but couple it with credible, time-bound governance reforms. If NNPCL must raise cash from Riyadh or traders, the government should simultaneously publish an independent fiscal-revenue plan tied to scheduled reforms, oversight arrangements and public disclosure of terms.
2. Prioritize gas monetization as a strategic pivot. Unlike oil, responsibly developed gas projects can underpin industrialization and generate foreign exchange through LNG or regional pipelines. Petrobras’s expertise is most valuable here — but only if fiscal terms and FX convertibility are credible.
3. Diversify funding sources while limiting forward sales of crude. Long-term resilience requires the revival of market access to global capital, including sovereign bond markets, multilaterals and concessional lenders. That in turn requires sound macro policies and transparent debt management.
4. Decouple ministerial power from operational oversight. Restoring a modicum of institutional checks — by delegating technical oversight and creating clearer governance boards for NNPCL — would reduce the political risk that accrues to the presidency and make the company more palatable to sophisticated investors.
The political ledger: why this matters for Tinubu
Politics is the arithmetic of perception as much as policy. Tinubu campaigned as a reformer; now, the optics of him as both president and petroleum minister weighing deals with Saudi banks and courting Petrobras will shape his political capital. A successful Petrobras deal and prudent Riyadh financing could cement his legacy as the leader who reignited investment and industrial growth. Failure — manifest as a bad loan, an unfulfilled investment promise, or a tightened fiscal squeeze — will be seized on by rivals and civil society. Moreover, the concentrated decision-making model fuels a narrative of elite control: in a country where oil revenues have historically funded patronage, the optics of opaque deals will undermine claims of broad-based reform.
Conclusion: opportunity shadowed by risk
Nigeria’s predicament is stark: vast gas and oil resources, weak fiscal buffers, and a political architecture that concentrates energy policy at the presidential level. NNPCL’s Riyadh outreach and the flirtation with Petrobras’s re-entry are both opportunities and symptoms – opportunities for fresh capital and technical help; symptoms of a country that has run short of conventional fiscal options.
The immediate task for Abuja is simple to state and hard to accomplish: secure credible financing while binding it to transparent governance reforms. Do that and Petrobras, Riyadh, Afreximbank and the rest may be partners in a national renaissance. Fail to do so and Nigeria risks mortgaging its future for immediate liquidity, leaving the people to pay the cost.
For President Tinubu the calculus is personal and national. He holds the levers of power; with that power comes a corresponding duty to ensure that every deal is negotiated with transparency, prudence and a clear view of intergenerational equity. The nation’s oil is not an emergency piggy bank. It is a public inheritance. How Tinubu manages this season of refinancing will shape Nigeria’s economic fate for a decade — and define his legacy in the annals of a country that cannot afford missteps.