Oil and gas companies have been obliged to seek loans from Nigerian banks as vandalism cuts into their revenues.
According to data from the Central Bank of Nigeria (CBN) the total loans to the oil and gas sector jumped from N5.19 trillion in January 2021 to N5.68 trillion as at the end of December 2021.
This indicates that N490 billion was borrowed by oil and gas companies in 12 months.
A breakdown shows operators in the downstream, natural gas and crude oil refining subsectors borrowed N290 billion to increase their total debt to N4.21 trillion from N3.92 trillion it stood in January 2021.
Companies in the upstream and services subsectors borrowed N200 billion and currently have a debt stock of N1.47 trillion in December, compared to N1.27 trillion in January 2021.
Upstream oil companies are involved primarily with oil discovery, extraction, and production. Downstream oil companies instead deal with refining and delivering petroleum products to consumers.
For context, the total N5.68 trillion owed by oil and gas operators (upstream and downstream) as of December 2021 represents 23.3 per cent of the N24.38 trillion loans advanced to the private sector by the nation’s banks.
What this means is that oil and gas firms received the biggest share of the commercial banks’ credit disbursement to the private sector.
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