NIGERIA: THE CRUDE OIL ECONOMY

Synterra the Nigeria Risk Management Consultants provide insight into how the oil markets affect the Nigerian economy. Nigeria's reliance on crude oil receipts is total. At a time of increasing volatility and uncertainty this blog seeks to provide an analysis of the effect the global energy markets have on business in Nigeria, their relationship with OPEC and how local policy decision making affects investment opportunities.
WILL TRUMP SANCTION  AND MAXIMUM PRESSURE STOP IRAN NUCLEAR PROGRAM?

WILL TRUMP SANCTION AND MAXIMUM PRESSURE STOP IRAN NUCLEAR PROGRAM?

How likely are Iran to come to the negotiating table with increased sanctions and maximum pressure. The drama surrounding the cancelled US military strike is classic President Donald Trump replete with contradictions, threats and out right misinformation. It was reminiscent of an episode of the FOX hit Series 24. Ultimately at...

NIGERIA OIL EXPORTS TO EUROPE HIGHEST IN OVER 5 YEARS MITIGATING LOSS OF US MARKETSHARE

NIGERIA OIL EXPORTS TO EUROPE HIGHEST IN OVER 5 YEARS MITIGATING LOSS OF US MARKETSHARE

According to reports from Platts outages at North Sea oilfields have helped put competing Nigerian oil on pace to arrive in Europe at the highest levels in seven months in June, according to Refinitiv Eikon data and traders. Nigeria is set to export about 905,000 bpd to the continent this month,...

BULLS CAUTIOUS ON INVENTORY DRAW AS MARKET WAITS FOR FED

BULLS CAUTIOUS ON INVENTORY DRAW AS MARKET WAITS FOR FED

U.S. crude oil inventories fell more than expected last week, logging their seventh-consecutive weekly draw.Initial gains in a knee-jerk reaction quickly faded as bulls turned cautious ahead of the Federal Reserve’s policy decision. The Energy Information Administration said in its regular weekly report that crude oil inventories decreased by about 8.5...

IRAN SANCTIONS THREATEN OPECs EXISTENCE

IRAN SANCTIONS THREATEN OPECs EXISTENCE

There can be no real dissent that the real special relationship is the one that exists between the US and Saudi Arabia and it is the one that poses an existential threat to OPEC. I am inclined to agree with Iran’s oil minister Bijan Namdar Zanganeh as he warns that OPEC is on the verge of collapse because some members are targeting their fellow producers. His remarks came after the Trump administration tightened sanctions on Iran’s oil exports on Thursday. The White House says Saudi Arabia and the UAE have agreed to offset the drop in supplies, even though OPEC has agreed to cap output through June. Saudi Arabia are yet to formally confirm this agreement stating only their   ongoing obligation to ensure that the market is adequately supplied with  crude and prices remain stable. Iran told the OPEC on Sunday that no member country should be allowed to take over another member's share of oil exports, this in direct response to Saudi Arabia's apparent offer to pump more oil thus increasing the efficiency of US sanctions on Iranian oil. Lest we forget despite OPEC’s nature being that of a cartel, its members are competitors for market share and in the case of Saudi Arabia and Iran pretty much everything else.

That regional rivals  Saudi Arabia and  Iranian have been able to co-exist within  OPEC during recent years of political tension and turbulence within the Middle East has always been a tenuous proposition .  Despite effectively  facing off in proxy wars in Syria, Yemen and Iraq, OPEC  has provided a refuge where their shared goal of obtaining the best price for their crude oil production has created an environment of collaboration albeit as a ‘marriage of convenience ’which up until recently has outweighed the political, religious and historical antipathy they share for each other.

NIGERIA LOSE 150,000 BPD AS NEMBE CREEK TRUNK LINE IS CLOSED AGAIN

NIGERIA LOSE 150,000 BPD AS NEMBE CREEK TRUNK LINE IS CLOSED AGAIN

Aiteo Group on announced a fresh closure of the Nembe Creek trunk line(NCTL). The NCTL is a 97-kilometre, 150,000 barrels of oil per day owned by Aiteo Group, purchased as part of the acquisition of oil bloc OML 29 bought from Shell Petroleum Development Company, (SPDC). It is one of Nigeria’s...

NIGERIA'S DEBT SERVICE OVER 50% OF REVENUE

NIGERIA'S DEBT SERVICE OVER 50% OF REVENUE

 

Nigeria's  Minister of Finance, Zainab Ahmed, in a act of wanton financial abracadabra and using as justification the metric established in the Fiscal Responsibility Act has said that Nigeria’s debt which currently stands at about N24.3tn is sustainable. She said that the country’s debt, which is about 19% to Gross Domestic Product(GDP), is low if compared to the likes of Ghana, Brazil, South Africa, Egypt and Angola. Quite why she chose  this seemingly random group of countries to base her comparison is unclear.

She  went on to say, “In the borrowing, we are still at 19 per cent to GDP; our borrowing is still low. Fascinating that the Nigerian finance minister seeks to rely on the one metric that has the least relevance whilst choosing to ignore far more ominous signs of an impending debt trap. Nigeria’s total debt stock as of December 31, 2018, stood at N24.387tn. The figure swelled by 12.25 per cent  year on year. Nigeria’s 2019 budget, presented by President Muhammadu Buhari in December and yet to be approved by lawmakers, envisaged the government issuing about 1.65 trillion naira ($4.6 billion) of new debt, half of which would be in foreign currency. The debt in real terms rose by  N2.66tn from December 31, 2017, to December 31, 2018. 

Director General of the DMO, Patience Oniha, said the funds were borrowed to fund projects, to finance budget deficit and to refinance maturing obligations. Particularly, some foreign debt was used to refinance treasury bills because of the short tenor of the bills, adding that borrowing from abroad had also helped to stabilise the local currency in the last two years. 

NIGERIA URGE SAUDI TO KEEP OPEC PRODUCTION CUTS,KACHIKWU

NIGERIA URGE SAUDI TO KEEP OPEC PRODUCTION CUTS,KACHIKWU

 Dr Ibe Kachikwu the Nigerian Minister of State for Petroleum yesterday said in Jeddah, Saudi Arabia, that he hoped the crude oil supply cut agreement between the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members would be extended until the end of 2019. OPEC+, agreed to cut production by 1.2...

TRANS FORCADO PIPELINE FIRE THREATENS FORCE MAJUERE SHUT IN

TRANS FORCADO PIPELINE FIRE THREATENS FORCE MAJUERE SHUT IN

Fire has occurred at a spill site along the Trans Forcados Pipeline (TFP) within the Chanomi Creeks in the prolific oil producing Niger Delta. It is unclear what led to the fire outbreak at the time of this report as security sources said investigation was ongoing to determine the cause of...

NIGERIA INCREASE GAS RESERVES  TO 200.79 TCF UP 7%

NIGERIA INCREASE GAS RESERVES TO 200.79 TCF UP 7%

the Director of Department of Petroleum Resources (DPR), Mordecai Ladan has announced that Nigeria’s gas reserves increased by 7.3 per cent from 187 trillion cubic feet (tcf) to 200.79 tcf. Nigeria has long been regarded as primarily a gas producing nation. The official reserves now place Nigeria ahead of Venezuela as...

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