Oil
Nigeria weighs Eurobond option to exit oil-backed Project Gazelle
High oil prices renew debate over whether Nigeria should issue a sovereign Eurobond to clear its crude-backed loan obligations.
Key points
- Project Gazelle currently ties up 90,000 barrels of Nigerian crude daily under a financing arrangement.
- The National Economic Council approved a $4.5 billion Gazelle 2 proposal to refinance $1.5 billion and raise $3 billion in new funds.
- Analysts suggest a sovereign Eurobond could potentially lower borrowing costs and free up crude for domestic refineries or export.
What happened
Nigeria's ongoing commitment of 90,000 barrels of oil per day under the Project Gazelle facility has triggered discussions among financial analysts over alternative borrowing strategies. Businessday NG reported that the National Economic Council approved a $4.5 billion Gazelle 2 plan on August 3, 2026. This proposed arrangement aims to refinance $1.5 billion of existing debt while providing an additional $3 billion for liquidity, fiscal requirements and infrastructure.
Under the proposed terms, the daily crude allocation would decrease from 90,000 barrels to roughly 78,750 barrels. However, advisory firms and market experts have raised questions about maintaining an oil-pledged structure when conventional sovereign debt might offer a cleaner exit.
Why it matters
With oil trading above $100 per barrel, the volume of crude pledged to lenders represents a substantial gross sales value. Businessday NG noted that 90,000 barrels daily equates to an annual gross value of approximately $3.3 billion. Pledging these resources limits the government's ability to direct petroleum toward foreign exchange generation or domestic processing.
CFG Advisory proposes issuing a sovereign Eurobond to settle the Gazelle facility entirely, thereby releasing the associated delivery commitments. Existing Debt Management Office data cited by market analysts place yields for Nigerian Eurobonds between 7.54 percent and 8.02 percent, compared to Gazelle's reported rate of roughly 10.37 percent.
Energy economist Olugbenga Olaoye told Businessday NG that tying down future oil supplies incurs an opportunity cost during periods of high commodity prices. Similarly, DCR analyst Idris Oyekan emphasised that any refinancing strategy must account for total transaction costs, including issuance fees and settlement charges, rather than relying solely on headline interest rates.
What comes next
Experts stress that the government must separate the refinancing of existing obligations from any fresh borrowing. Corporate finance specialist Sheriff Abdulsalam pointed out that adding $3 billion in new debt requires clear justification regarding its fiscal impact and repayment capacity.
Freeing up crude could potentially supply domestic facilities such as the Dangote Refinery, though analysts caution that consumer product prices will still depend on broader market dynamics. Observers advise authorities to transparently disclose all-in financing costs and repayment terms before proceeding with any new debt arrangement.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Crude benchmarks move budgets, currencies and inflation in producer and importer countries alike. For economies such as Nigeria, where fuels dominate exports, production and refining decisions move the whole economy.
8.8% of Ghana’s merchandise exports were fuels in 2025Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
