NNPC Ends Crude-Backed Loans for Port Harcourt & Warri Refineries

NNPC Pulls Plug on Crude-Backed Loans for Port Harcourt, Warri Refineries, Opts for Performance-Based Funding

State oil firm says era of securing loans against future crude production to keep refineries running has ended, as it pushes for commercial sustainability.

The Nigerian National Petroleum Company Limited (NNPC) has announced a major shift in its financial strategy, declaring an end to the practice of using crude oil-backed loans to fund the operations and rehabilitation of the Port Harcourt and Warri refineries.

Group Chief Executive Officer of NNPC Ltd, Bayo Ojulari, disclosed this on Tuesday at the Nigeria Oil and Gas Conference in Abuja. He stated that the company is moving decisively towards a new commercial model where the refineries must become financially self-sustaining and raise financing based on their operational performance, rather than relying on loans tied to future oil volumes .

“We’re moving away from situations where the refineries are taking loans based on barrels and not linked to the productivity and performance of the refineries. We are changing that,” Ojulari declared. He stressed that the long-term strategy is to ensure the facilities operate as viable businesses, capable of generating their own funding and attracting investment. “Our solution has to be that those refineries are able to work, raise their own, and deliver, not more contractors coming to take value. That’s the strategy. That’s sustainability. And that’s what will live beyond us,” he added .

A New Commercial Era for Ailing Assets

The move signals a radical departure from the previous administration’s reliance on forward-sale agreements, which effectively mortgaged Nigeria’s future oil production for immediate cash. Data from the company’s 2024 Audited Financial Statement showed that NNPC had pledged over N9 trillion across various crude-backed deals, including Projects Yield, Gazelle, and Leopard, to address funding needs .

The Port Harcourt Refinery alone had drawn N1.4 trillion from a N1.5 trillion facility—Project Yield—backed by 67,000 barrels per day to fund its rehabilitation under an EPC contract . These liabilities had grown into a multi-year burden on the nation's oil output. Additionally, a report by The PUNCH noted that the three refineries incurred monumental losses, accumulating a staggering N13.2 trillion in debt to the NNPC over 2023 and 2024, with the Port Harcourt refinery's obligations soaring from N1.99 trillion in 2023 to N4.22 trillion in 2024 .

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Ojulari acknowledged that such practices have put the company in a precarious financial position, revealing that they have begun restructuring the investment portfolio by eliminating projects without clear financing and profitability prospects. The national oil company is also applying the same performance-based commercial principles to its infrastructure model, as seen with the Ajaokuta-Kaduna-Kano (AKK) gas pipeline via “Project Nexus,” where financing is linked to the project's throughput .

Strategic Partnerships and Public Skepticism

This policy shift comes just weeks after NNPC signed a Memorandum of Understanding with Chinese firms Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Company Ltd to explore a technical equity partnership for the refineries . The proposed arrangement, which could see the Chinese investors acquire a 51% stake, is designed to replace the traditional contractor model with long-term equity participation, joint governance, and shared technical expertise for operations, maintenance, and capacity expansion .

The announcement has been met with widespread public skepticism, a sentiment echoed by former President Olusegun Obasanjo, who previously questioned the workability of the refineries and criticized the massive funds sunk into the facilities . However, Ojulari remains optimistic. He has reassured Nigerians that despite the history of failed Turnaround Maintenance (TAM) projects—which left the refineries largely non-operational despite billions in spending—the plants will be commercially viable again .

“Our refinery ambition depends on integrated partnership... That’s the strategy. That’s sustainability,” Ojulari reiterated, framing the end of crude-backed loans not just as a financial decision, but as the foundation for a sustainable future for Nigeria’s downstream sector .

The success of this new direction now rests on transforming the refineries from cost centers into profit-making assets, a task that will define the legacy of the current NNPC leadership.