Energy
Energy firms owe Nigerian banks N1.54trn
……Sector’s non-performing loans stands at N32bn
LAGOS – Energy industry firms, including those operating in the power and oil and gas sectors owe banks in Nigeria over N1.544 trillion, about $10 billion, while the total bad debts profile of the firms stand at N31.65 billion.
Biztellers gathered the figures from the year end, December 31, 2011 financial statements of the banks released to investors and others stakeholders last year.
Although the 2012 financial statements of the banks are still being expected, but it is expected that banks will begin to release the results from the end of March, with analysts projecting that the figures will rise.
A breakdown of the total non-performing loans shows that the bad debts of oil and gas firms currently stands at over N29.214 billion, while those from the power sector stands at N2.44 billion.
These debts, recorded in the books of 10 of the commercial banks in Nigeria, were classified as Non-Performing Loans, NPL, and might see the banks transferring the loans to the Asset Management Corporation of Nigeria, AMCON.
Despite the high non-performing loans and the challenges faced by the banks in lending to firms in the energy sector in the last couple of years, the banks still gave out loans totaling N1.544 trillion to oil and gas and power firms during the period in review.
However, a number of banks refused to disclose their exposures in their reports. They are Access Bank Plc, Union Bank Nigeria Plc and Skye Bank Plc, which made no mention of loans extended to oil and gas firms in their 2011 financial statements, while the financial statements of Standard Chartered Bank and Citibank could not be accessed, as they are not listed on the Nigerian Stock Exchange.
Also, the financial statements of Keystone Bank, Mainstreet Bank and Enterprise Bank could not be accessed due to the fact that they are not public companies.
An analyst who spoke on the condition of anonymity, said Access Bank, Union Bank and Skye Bank inability to give out loans to energy firms in their 2011 financial year, may be as a result of fear and weak risk management structure.
The analyst is of the view that the banks, coming out from the crisis in the sector without been swallowed, might decide to tread cautiously in advancing loans, so as to avoid a repeat.
The analysts further stated that most of the banks are yet to put in place a strong and effective risk management structure, a factor which might affect their advancement of loans to certain high-risk sector of the economy.
AMCON bars banks from loaning to chronic debtors
The CBN and AMCON late last year ordered banks to stop giving out loans to individuals and organisations who are indebted to banks to the tune of N5 billion and above.
In the list released by the CBN and AMCON, 20 oil and gas firms were credited with N705.885 billion while five power firms owed N114.928 billion.
It is expected that a significant reduction will be recorded in the banks’ lending to oil firms, when their 2012 financial statements are released.
The impending reduction in local banks’ exposure to oil and gas, and power firms has raised concerns about how these firms will finance their operations.
Analysts are of the view that the oil firms might have to resort to offshore financial institutions or multilateral financial agencies to finance their operations, and if the issue is not addressed soon, Nigeria’s oil output and local supply of petroleum products will likely be affected negatively.
Already, the Nigerian Association of Petroleum Explorationists, NAPE, had declared that Nigeria’s potential of generating about 2.26 million metric tonnes of liquefied petroleum gas, LPG, annually will not be achieved, unless the country addressed the issue of infrastructure deficit and lack of access to finance by players in the oil and gas sector.
In a presentation by Mr. Mustapha Jibrin, at one of its conferences, NAPE maintained that financing is critical, especially as it is evident that the country’s Vision 20:2020 objective can only be achieved with a stable power supply, with gas production playing a critical role.
He stated that recent gas discoveries in other parts of Africa were already affecting Nigeria’s natural gas potential and its global competitiveness, adding that increased access to finance and infrastructure development will help reverse this trend.
He said, “The competitiveness of Nigeria’s natural gas and the numerous opportunities to monetise it would be impacted by recent discoveries of large reserves of gas in other parts of Africa, especially offshore East Africa, as well as huge exploitations of shale gas in different parts of the world.”
Also speaking, Mr. David Adonri, an economic expert, expressed concerns over the huge exposure of the banks to energy firms in their current financial statement.
He said the Nigerian petroleum industry is not viable, especially due to the delay in the deregulation of the sector and government control of the sector.
He added that financing power and oil and gas projects with bank loans is a mismatch, due to the long term nature of such projects and the short term nature of bank loans. “It is disturbing to hear that banks are still exposing themselves to the petroleum industry in such a manner that could threaten their existence.
“Those affected have failed to learn from the past. Any bank over-exposing itself to the petroleum industry does so at its peril because government’s control of that sector is a recipe for commercial failure.
“The petroleum sector can only become viable when it is completely deregulated and privatized If the balance sheet of any bank is damaged as a result of excessive risk taking, CBN and NDIC should liquidate it and the management made to pay for their recklessness.
“Considering the short maturity profile of banks’ deposit liabilities in Nigeria, it is inconceivable that they will venture into financing Electric Power projects which by nature are long term. The mismatch in financing will definitely result in bad debt. Electric Power infrastructure rehabilitation and development requires medium to long term funds which are obtainable from the Capital Market and Development Finance institutions.”
CBN’s intervention
The challenges faced by the banks between 2009 and 2011, when the CBN sacked the management of five banks and nationalized three of the banks were brought about by the inability of the oil firms to pay their debts following the crash in the prices of crude oil in the international market. This was in the wake of the global financial crisis and the credit crunch in the global economy.
The CBN said the troubled banks had huge portfolio of non-performing loans, far above the figures allowed by law, in addition to other irregularities recorded in the banks.
The industry regulator also said the banks had difficulties in meeting their obligations to customers and other stakeholders and were constantly on ‘life support’, continuously accessing the Expanded Discount Window, EDW, for funding.
When the CBN moved against the five banks, August 2009, it said the total loan portfolio of the five banks was N2.802 trillion. Margin loans amounted to N456.28 billion and exposure to Oil and Gas was N487.02 billion, while aggregate non-performing loans stood at Nl.143 trillion representing 40.81 per cent.
The CBN said from information at its disposal, it is evident that the five banks accounted for a disproportionate component of the total exposure to capital market and oil and gas, thus reflecting heavy concentration to high risk areas relative to other banks in the industry.
After the CBN’s efforts at sanitizing the banks and cleaning up their books, the banks have resumed lending to the energy sector, however, with extreme caution.
New crude grade variants, Utapate and Cawthorne, have boosted Nigeria’s crude oil production by 12.16 million barrels.
The crude grades, introduced in 2024 and early 2026, represent the latest additions to the country’s basket of crude oil grades aimed at expanding export streams and strengthening oil revenues.
Data contained in the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) monthly crude and condensate production, indicated that the Utapate crude grade produced a total of 8.75 million barrels between January and May 2026, while the newly introduced Cawthorne blend contributed 3.41 million barrels during the same period, bringing the combined output from both crude grades to approximately 12.16 million barrels.
The data also showed that Utapate has yet to achieve its projected output target announced by the government, even as production remained more than 20,000 barrels per day below the 80,000 bpd target set by operators.
The figures showed that Utapate recorded an average daily production of 55,190 barrels in January. Based on the 31-day month, this translated to a total monthly output of 1.71 million barrels.
Output increased to 57,970 barrels per day in February, yielding about 1.62 million barrels, before rising marginally to 58,020 barrels daily in March, equivalent to roughly 1.80 million barrels.
In April, the field attained its highest daily production level of 59,290 barrels, producing an estimated 1.78 million barrels during the month. Production moderated slightly to 59,170 barrels per day in May but still generated approximately 1.83 million barrels due to the longer calendar month.
However, despite the upward trend, the data indicated that Utapate remained significantly below the 80,000 barrels-per-day target. The field fell short by 24,810 barrels daily in January, 22,030 barrels in February, and 21,980 barrels in March.
The production gap narrowed to 20,710 barrels per day in April before widening marginally to 20,830 barrels in May.
The development suggests that although operators have made progress in scaling up production, the ambitious target announced earlier by the Nigerian National Petroleum Company Limited has yet to be realised.
The Utapate field, which commenced production in May 2024, had been projected to achieve 80,000 barrels per day by the end of 2025.
The Utapate crude blend was introduced into the international market by the NNPC Ltd and its partner, Sterling Oil Exploration and Energy Production Company Limited, following the lifting of the maiden cargo of 950,000 barrels destined for Spain.
Produced from Oil Mining Lease 13 in Akwa Ibom State, the crude grade possesses characteristics that have attracted international interest. It has a sulphur content of 0.0655 percent and a relatively low carbon footprint resulting from flare gas elimination.
Meanwhile, another emerging crude stream, Cawthorne, contributed 3.41 million barrels to Nigeria’s production between January and May, according to the NUPRC data.
The figures showed that Cawthorne’s average daily production rose sharply from 12,340 barrels in January to 16,450 barrels in February and 23,970 barrels in March. The field sustained the momentum in April, reaching 30,970 barrels per day before easing slightly to 28,940 barrels daily in May.
The monthly production volumes translated to 382,540 barrels in January, 460,600 barrels in February, 743,070 barrels in March, 929,100 barrels in April and 897,140 barrels in May.
The NNPC Ltd had recently announced the commencement of exports from the Cawthorne blend, describing the development as part of efforts to increase Nigeria’s crude oil production and strengthen the country’s position in the global energy market.
In a statement, the Chief Corporate Communications Officer of NNPC Ltd, Andy Odeh, said the first cargo of the new grade was lifted aboard the MT Eburones vessel for shipment to the Netherlands.
“The Nigerian National Petroleum Company Limited has commenced export of its new crude grade, Cawthorne, marking a significant milestone in the company’s drive to increase Nigeria’s crude oil production and expand its portfolio of globally competitive export streams,” Odeh said.
He added, “Cawthorne blend crude, the latest addition to Nigeria’s basket of crude grades, has an API gravity of 36.4, placing it firmly within the light, sweet category, comparable to Bonny Light, and highly valued in the global market for its superior petrol and diesel yields.”
According to him, the maiden cargo, estimated at 950,000 barrels, was exported through the Cawthorne Floating Storage and Offloading vessel located offshore Bonny, Rivers State.
“The cargo was exported via the Cawthorne Floating Storage and Offloading vessel, which is strategically located offshore Bonny. The facility enhances crude evacuation from OML 18 and strengthens Nigeria’s export reliability, operational efficiency and overall energy security,” Odeh stated.
The emergence of both Utapate and Cawthorne underscores Nigeria’s determination to diversify its crude export portfolio and maximise oil earnings. However, the latest NUPRC figures also highlight the operational challenges facing producers as they strive to convert ambitious output targets into actual barrels.
Combined, Utapate and Cawthorne contributed an estimated 12.16 million barrels of crude oil between January and May, providing additional support to Nigeria’s broader efforts to sustain production growth and improve foreign exchange earnings from the oil sector.
On Thursday, the NUPRC reported that Nigeria’s crude oil production rose above its Organisation of the Petroleum Exporting Countries quota in May 2026, with the country recording its highest crude output in 15 months amid improved operational stability and the absence of major disruptions across key oil facilities.
Data released showed that Nigeria produced an average of 1,530,354 barrels of crude oil per day in May, representing 102 per cent of the country’s 1.5 million barrels-per-day quota approved by OPEC.
When condensate production of 170,446 barrels per day was added, Nigeria’s total oil output climbed to 1,700,800 barrels per day, further strengthening the country’s position as Africa’s largest oil producer and boosting revenue.
OPEC oil output in May hit its lowest in more than two decades, a Reuters survey found, as a U.S. naval blockade cut Iran’s exports and Iran’s effective closure of the Strait of Hormuz slashed exports by other Gulf producers.
Output by the 11-member Organization of the Petroleum Exporting Countries fell by 1.06 million barrels per day month-on-month to 16.13 million bpd, the survey found.
That was the lowest monthly figure since at least 2000, according to Reuters surveys, and well below the levels seen during the COVID-19 pandemic in 2020 when demand collapsed.
The figures exclude the United Arab Emirates which quit OPEC as of May 1.
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Saudi Arabia had a further decline, although Iraq was able to increase supply due to increased domestic use, sources in the survey said.
Venezuela and Nigeria also pumped more.
Eight members of the OPEC+ producer group, which includes OPEC plus allies including Russia, had agreed to raise production in May, but the Iran war and U.S. blockade made that impossible.
The Reuters survey is based on flow data from financial group LSEG, information from other companies that track flows, such as Kpler, and information provided by sources at oil companies, OPEC and consultants.
Credit – Times of India
Shell Nigeria Gas (SNG) shared its experiences in pioneering gas distribution nearly 30 years ago, and identified the expansion of pipeline natural gas infrastructure and the market‑making role of gas distributors as critical in moving gas from a policy aspiration to a practical energy solution for Nigerian industries.
“When SNG started in Agbara–Ota over 20 years ago, demand was nowhere near what it is today,” recalled Managing Director Ralph Gbobo at a panel session on “Building a Bankable Gas Distribution Ecosystem: Infrastructure, Capital and Market Demand” at the 2nd business forum of the Association of Local Distributors of Gas (ALDG) in Abuja late last week.
Represented by Head, Gas Distribution, Chukwuka Amos-Ejesi, Raph said: “The economics was not perfect, but there was a leap of faith anchored on Nigeria’s industrialisation trajectory. That decision has proven right.”
He said SNG’s persistence proved that when demand ambition, supply certainty, enabling infrastructure, and commercial clarity come together, even if not perfectly at the start, it creates industrial clusters that can grow and attract long-term capital. “Sustainability and bankability emerge over time, as utilization deepens and confidence builds,” he pointed out.
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The theme of the forum was “From Gas Abundance to Gas Access: Reassessing Nigeria’s Gas Distribution Imperatives,” with industry leaders and other stakeholders discussing the use of gas to drive industrialisation. The panel session agreed on the need for “clear, supportive and credible policy frameworks, especially measures designed to improve the use of gas.
Ralph noted: “The introduction of gas-focused policies, notably the Petroleum Industry Act, marked a turning point. By reinforcing the role of gas in Nigeria’s energy and industrial strategy and embedding instruments such as the Network Code- a critical framework that governs the operations of the Domestic Gas market and ensures transparency and stability, and the Domestic Gas Supply Obligation which compels gas producers to allocate gas to the domestic market, the PIA significantly reduced policy ambiguity around gas development.”
He added: “The introduction of clearer pricing frameworks for gas supply and transportation and a more transparent and competitive licensing regime, has also strengthened market confidence. Together, these measures have improved producer confidence, particularly for domestic gas projects, and signaled the government’s strong commitment to gas as a driver of industrial development.”
Incorporated in 1998 as a fully Shell-owned gas distribution company, SNG currently serves over 150 clients in Abia, Bayelsa, Ogun and Rivers states, partnering with governments and other stakeholders to take the cleaner and more affordable energy to the doorsteps of industries. In the first half of this year alone, the company has connected two additional companies in Ogun State to its gas distribution network.
Photo Caption – L–R: Chairman, Association of Local Distributors of Gas (ALDG), and Managing Director, Axxela Gas Distribution, Kehinde Alabi; and Head of Gas Distribution, Shell Nigeria Gas, Chukwuka Amos-Ejesi, receiving a commendation plaque on behalf of SNG Managing Director, Ralph Gbobo, in recognition of his professional and diligent service on the Governing Board of the Association, at the Association of Local Distributors of Gas (ALDG) Business Forum in Abuja
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