The Federal Ministry of Finance has refuted widespread media reports claiming that a proposed $5 billion oil-backed loan involving the Nigerian National Petroleum Company Limited (NNPC Ltd.) and Saudi oil giant Aramco has collapsed.

The ministry clarified that no final decision has been taken on the deal, and the reports suggesting its failure are “unfounded.”

In a statement issued on Wednesday by Mohammed Manga, Director of Information and Public Relations, the ministry described the claims as speculative and disconnected from the facts, stating that while the government is exploring various financing strategies, including forward sales of crude, it has yet to reach a conclusive agreement or make a public announcement regarding the proposed deal.

“The Federal Government of Nigeria is aware of recent media reports concerning a potential forward sale of crude oil involving NNPC Ltd. While market speculation is not uncommon in the context of ongoing economic reforms and transactions, no final decision has been announced by the Government, and commentary suggesting the collapse of any such initiative is unfounded,” the statement read.

The statement comes amid reports that negotiations between Nigeria and Aramco for the $5 billion loan had slowed due to a combination of falling global crude prices and concerns over Nigeria’s crude supply capacity. Sources close to the deal told Reuters that international lenders were growing increasingly cautious, fearing Nigeria may not be able to meet the long-term supply commitments required to back the loan.

If finalized, the transaction would mark the single largest crude-backed financing for Nigeria and Aramco’s first major oil-for-cash deal in the country. The facility was designed to help bolster Nigeria’s dollar liquidity at a time when foreign exchange reserves are under pressure and the local currency has faced repeated devaluations.

The federal government insists that it is still actively exploring the initiative as part of a broader strategy to shore up external reserves and support economic reforms introduced under the administration of President Bola Tinubu. Those reforms include the removal of fuel subsidies, the unification of exchange rates, and a renewed push for investment across critical sectors.

In recent years, Nigeria has turned to oil-backed loans to raise quick foreign exchange. One such arrangement was the $3.3 billion facility from Afreximbank, under which the country recently received a final tranche of $1.05 billion in April 2024. That facility is being repaid through crude oil priced at $65 per barrel, with Nigeria committing approximately 90,000 barrels per day for repayment.

However, the Aramco deal represents a far larger commitment and has drawn scrutiny over the sustainability of using future oil output as collateral, particularly amid declining production levels caused by sabotage, theft, and years of underinvestment in the upstream sector.

Responding to the controversy, the Ministry of Finance reiterated the government’s focus on “innovative, transparent, and fiscally responsible” financing mechanisms, stressing that Nigeria’s oil resources remain a critical lever for economic stability and liquidity enhancement.

“The Government remains focused on deploying a range of innovative, transparent, and fiscally responsible financing strategies to optimize Nigeria’s oil assets, improve external liquidity, and strengthen macroeconomic stability,” it said.

However, analysts note that while oil-backed deals offer short-term relief, they also present long-term fiscal risks if not carefully structured. These include potential future revenue shortfalls if oil prices decline further or if production remains below projection.

Stakeholders now await a clearer signal on whether the Aramco negotiations will be revived—or shelved indefinitely. Until then, the Ministry has urged the public and media to rely only on official communications regarding the status of the deal.

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