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Nigeria Struggles to Boost Oil Output – Bloomberg



  • Nigeria Struggles to Boost Oil Output; Good For OPEC

Nigeria’s progress in curbing militant attacks hasn’t much boosted its oil output. While that’s bad news for a country mired in its worst economic slump in 25 years, it’s making life easier for fellow OPEC members.

Africa’s largest economy was pumping about 1.5 million barrels a day late last month, 30 percent below what it was hoping to achieve and only a modest recovery from an almost 30-year low of 1.4 million in August. While peace efforts have curbed the frequency of attacks in the oil-rich Niger River delta, the Forcados export terminal, the country’s third largest, remains closed and shipments are down at many others.

If these disruptions persist they could have an unintended consequence: helping the Organization of Petroleum Exporting Countries boost oil prices.

“Bringing the Forcados loading terminal back into action is key for Nigeria’s exports,” said Charles Swabey, an oil and gas analyst at BMI Research, in an e-mail. If the government follows through on the peace process, then Nigeria could become “a drag” on OPEC’s push to rebalance the market, he said, “and will likely slow the process down.”

When OPEC and 11 other producers forged an accord in December to reduce their production to eliminate a global oversupply, conflict-prone Nigeria and Libya were exempt. So a significant production increase from either nation would make it harder for the group to fulfill its pledge to reduce output by almost 4 percent.

Amid signs that U.S. output is recovering and prices stalled in the mid $50s, the group can ill afford to have its own members diluting its historic deal. Global benchmark Brent was trading $54.80 a barrel, down 0.5 percent, as of 6:37 a.m. London time on Wednesday.

Peace Dividend

Since the start of negotiations in November with militants — most of whom call themselves the Niger Delta Avengers — Nigeria’s Minister of State for Petroleum Emmanuel Kachikwu has repeatedly said there would be a peace dividend in terms of improved oil-production. In November, the minister was targeting output of 2.2 million barrels by the end of 2016.

In reality, many of the country’s largest export terminals are experiencing disruptions. Kachikwu predicted that Forcados, which shut down in February, would restart in June, then September, then October. There’s currently ”no update” on when the facility can resume operations, said Precious Okolobo, a Lagos-based spokesman for operator Royal Dutch Shell Plc.

Qua Iboe, the nation’s largest crude stream, is still operating at reduced capacity as permanent repairs are completed to damage on its pipeline inflicted in July, Exxon Mobil Corp. said Jan. 31.

About 500,000 barrels a day of production is currently offline because of militancy, Manji Cheto, senior vice president for West Africa at New York-based Teneo Intelligence, said in an e-mail. While the nation’s output recovered to an average of 1.64 million barrels last month from 1.5 million in December, that’s still well below the 2015 average of 1.99 million barrels a day, according to data compiled by Bloomberg.

Amnesty Program

Even before the resurgence of militant activity, Nigeria was struggling as a result of low oil prices. For President Muhammadu Buhari, “a peace deal is critical to his government’s ability to steer the economy out of recession and improve his political capital ahead of the 2019 elections,” said Amaka Anku, an analyst at Eurasia Group.

His administration’s 2017 budget proposed restoring financing for the Presidential Amnesty Program, which pays former militants an allowance, to its pre-2016 level of about $215 million from $66 million budgeted last year, she said. This allowance, started by President Umaru Yar’Adua in 2009 and expanded by President Goodluck Jonathan in 2011, was credited with maintaining a relative peace in the delta before it was cut.

Oando Plc, a Nigerian energy company that lost 20 percent of its production due to attacks last year, is optimistic about Buhari’s measures.

“The government is already engaging the Niger delta inhabitants towards creating an enabling environment for us to drive our production back up,” Group Chief Executive Officer Wale Tinubu said in an interview. “I know for a fact we’re going to get an improvement.”

The Niger Delta Avengers, which claimed most of the attacks last year, threatened last month to widen its campaign after becoming frustrated with government talks.

No Contact

“I am not sure we’re on that path where one can confidently say there’s clear indication of dialogue,” said Ledum Mitee, a lawyer and minority-rights activist directly involved in the peace talks. After community leaders met the president in November, there’s been no further contact, he said by phone from Port Harcourt.

“In spite of this, we have been meeting and trying to appeal to the grassroots that the peace should be maintained,” but the situation could worsen if the militants think they’re not being taken seriously, he said.

Laolu Akande, a spokesman for Vice President Osinbajo, who is leading the peace initiative, didn’t respond to calls and an e-mail seeking comment.

Oil output for the year will likely average 1.7 million barrels a day, aided by new offshore fields coming online in the second half of 2017, according to Eurasia Group’s Anku. She expects a short-lived deal with militants and a return of sustained attacks in 2018.

“I see the federal government engaging the region more constructively,” Dolapo Oni, Lagos-based head of Ecobank Energy Research, said by e-mail. A recent visit by the Nigerian Vice President Yemi Osinbajo to delta is a start “however, attacks will likely continue until we strike the right tone.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Federal Government Set to Seal $3.8bn Brass Methanol Project Deal in May 2024




The Federal Government of Nigeria is on the brink of achieving a significant milestone as it prepares to finalize the Gas Supply and Purchase Agreement (GSPA) for the $3.8 billion Brass Methanol Project.

The agreement to be signed in May 2024 marks a pivotal step in the country’s journey toward industrialization and self-sufficiency in methanol production.

The Brass Methanol Project, located in Bayelsa State, is a flagship industrial endeavor aimed at harnessing Nigeria’s abundant natural gas resources to produce methanol, a vital chemical used in various industrial processes.

With Nigeria currently reliant on imported methanol, this project holds immense promise for reducing dependency on foreign supplies and stimulating economic growth.

Upon completion, the Brass Methanol Project is expected to have a daily production capacity of 10,000 tonnes of methanol, positioning Nigeria as a major player in the global methanol market.

Furthermore, the project is projected to create up to 15,000 jobs during its construction phase, providing a significant boost to employment opportunities in the country.

The successful execution of the GSPA is essential to ensuring uninterrupted gas supply to the Brass Methanol Project.

Key stakeholders, including the Nigerian National Petroleum Company Limited and the Nigerian Content Development & Monitoring Board, are working closely to finalize the agreement and pave the way for the project’s advancement.

Speaking on the significance of the project, Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized President Bola Tinubu’s keen interest in expediting the Brass Methanol Project.

Ekpo reaffirmed the government’s commitment to facilitating the project’s success and harnessing its potential to attract foreign direct investment and drive economic development.

The Brass Methanol Project represents a major stride toward achieving Nigeria’s industrialization goals and unlocking the full potential of its natural resources.

As the country prepares to seal the deal in May 2024, anticipation grows for the transformative impact that this landmark project will have on Nigeria’s economy and industrial landscape.

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IMF Report: Nigeria’s Inflation to Dip to 26.3% in 2024, Growth Expected at 3.3%



IMF global - Investors King

Nigeria’s economic outlook for 2024 appears cautiously optimistic with projections indicating a potential decrease in the country’s inflation rate alongside moderate economic growth.

The IMF’s revised Global Economic Outlook for 2024 highlights key forecasts for Nigeria’s economic landscape and gave insights into both inflationary trends and GDP expansion.

According to the IMF report, Nigeria’s inflation rate is projected to decline to 26.3% by the end of 2024.

This projection aligns with expectations of a gradual easing of inflationary pressures within the country, although challenges such as fuel subsidy removal and exchange rate fluctuations continue to pose significant hurdles to price stability.

In tandem with the inflation forecast, the IMF also predicts a modest economic growth rate of 3.3% for Nigeria in 2024.

This growth projection reflects a cautious optimism regarding the country’s economic recovery and resilience in the face of various internal and external challenges.

Despite the ongoing efforts to stabilize the foreign exchange market and address macroeconomic imbalances, the IMF underscores the need for continued policy reforms and prudent fiscal management to sustain growth momentum.

The IMF report provides valuable insights into Nigeria’s economic trajectory, offering policymakers, investors, and stakeholders a comprehensive understanding of the country’s macroeconomic dynamics.

While the projected decline in inflation and modest growth outlook offer reasons for cautious optimism, it remains essential for Nigerian authorities to remain vigilant and proactive in addressing underlying structural vulnerabilities and promoting inclusive economic development.

As the country navigates through a challenging economic landscape, concerted efforts towards policy coordination, investment promotion, and structural reforms will be crucial in unlocking Nigeria’s full growth potential and fostering long-term prosperity.

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South Africa’s March Inflation Hits Two-Month Low Amid Economic Uncertainty



South Africa's economy - Investors King

South Africa’s inflation rate declined to a two-month low, according to data released by Statistics South Africa.

Consumer prices rose by 5.3% year-on-year, down from 5.6% in February. While this decline may initially suggest a positive trend, analysts caution against premature optimism due to various economic factors at play.

The weakening of the South African rand against the dollar, coupled with drought conditions affecting staple crops like white corn and geopolitical tensions in the Middle East leading to rising oil prices, poses significant challenges.

These factors are expected to keep inflation relatively high and stubborn in the coming months, making policymakers hesitant to adjust borrowing costs.

Lesetja Kganyago, Governor of the South African Reserve Bank, reiterated the bank’s cautious stance on inflation pressures.

Despite the recent easing, inflation has consistently remained above the midpoint of the central bank’s target range of 3-6% since May 2021. Consequently, the bank has maintained the benchmark interest rate at 8.25% for nearly a year, aiming to anchor inflation expectations.

While some traders speculate on potential interest rate hikes, forward-rate agreements indicate a low likelihood of such a move at the upcoming monetary policy committee meeting.

The yield on 10-year bonds also saw a marginal decline following the release of the inflation data.

March’s inflation decline was mainly attributed to lower prices in miscellaneous goods and services, education, health, and housing and utilities.

However, core inflation, which excludes volatile food and energy costs, remained relatively steady at 4.9%.

Overall, South Africa’s inflation trajectory underscores the delicate balance between economic recovery and inflation containment amid ongoing global uncertainties.

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