- 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.
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.
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.
“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.”
NNPC To Resume Oil Exploration In Sokoto Basin
The Nigerian National Petroleum Corporation on Thursday announced plans to resume active oil exploration in Sokoto Basin.
A statement issued in Abuja on Thursday by NNPC spokesperson, Kennie Obateru, said the corporation’s Group Managing Director, Mele Kyari, said exploration for crude would resume in the Sokoto Basin.
The statement read in part, “Kyari also hinted of plans for the corporation to resume active exploration activities in the Sokoto Basin.”
The NNPC boss disclosed this while receiving the Governor of Kebbi State, Atiku Bagudu, who paid Kyari a courtesy visit in his office on Thursday.
In October 2019, the President, Major General Muhammadu Buhari (retd.), had during the spud-in ceremony of Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North-East, said the government would explore for oil and gas in the frontier basins across the country.
He outlined the basins to include the Benue Trough, Chad Basin, Sokoto and Bida Basins.
Buhari had also stated that attention would be given to the Dahomey and Anambra Basins which had already witnessed oil and gas discoveries.
Kyari restated NNPC’s commitment to the partnership with Kebbi State for the production of biofuels, describing the project as viable and in tandem with the global transition to renewable energy.
He said the rice production programme in the state was a definite boost to the biofuels project.
Kyari said the linkage of the agricultural sector with the energy sector would facilitate economic growth and bring prosperity to the citizens.
He was quoted as saying, “We will go ahead and renew the Memorandum of Understanding and bring in any necessary amendment that is required to make this business run faster.”
The Kebbi State governor expressed appreciation to the NNPC for its cooperation on the biofuel project.
Bagudu said the cassava programme was well on course but the same could not be said of the sugarcane programme as the targeted milestone was yet to be attained.
Kebbi state is one of the states that the NNPC is in partnership with for the development of renewable energy.
Nigeria To Benefit As G-20 Approves Extension Of Debt Relief Till December
Finance ministers of G-20 countries have approved an extension of debt relief for the world’s poorest nations till December 2021.
David Malpass, World Bank president, made the announcement at the virtual spring meeting, on Wednesday.
TheCable had earlier reported that the G-20 countries will meet this week to consider an extension of the debt freeze.
The G-20, is a group of finance ministers and central bank governors from 19 of the world’s largest economies, including those of many developing nations, along with the European Union.
G-20 countries had established a debt service suspension initiative (DSSI) which took effect in May 2020.
Nigeria had benefited from the initiative which delivered about $5 billion in relief to more than 40 eligible countries.
The suspension period which was originally set to end on December 31, 2020 was extended to June 2021.
Malpass said the extension to December 2021 will boost economic recovery and promote job creation in low income countries.
He urged countries to be transparent in their approach to the debt service payment extension.
“On debt, we welcome a decision by the G20 to extend the DSSI through 2021. The World Bank is also working closely with the IMF to support the implementation of the G20 Common Framework,” he said.
“In both these debt efforts, greater transparency is an important element: I urge all G20 countries to disclose the terms of their financing contracts, including rescheduling, and to support the World Bank’s efforts to reconcile borrower’s debt data more fully with that of creditors.
“Participation by commercial creditors and fuller participation by official bilateral creditors will be vital. I urge all G20 countries to instruct and create incentives for all their public bilateral creditors to participate in debt relief efforts, including national policy banks. I also urge G20 countries to act decisively to incentivize the private creditors under their jurisdiction to participate fully in sovereign debt relief efforts for low-income countries.
“Debt relief efforts are providing some welcome fiscal space, but IDA countries need major new resources too, including grants and highly concessional resources. From April to December 2020, the first DSSI period, our net transfers to IDA and LDC countries were close to $17 billion, of which $5.8 billion were on grant terms.
“Our new commitments were almost $30 billion, making IDA19 the single largest source of concessional resources for the poorest countries and the key multilateral platform for support. To recover from COVID, much more is needed, and we welcome the G20’s support for advancing IDA20 by one year.”
IMF / Fiscal Monitor Report April 2021 Forecast
Unprecedented fiscal support by governments during the pandemic has prevented more severe economic contractions and larger job losses, but risks remain of long-term scarring the International Monetary Fund says in its Fiscal Monitor report released on Wednesday (April 7) in Washington, DC.
Meanwhile, such support, along with drops in revenues, has raised government deficits and debt to unprecedented levels across all country income groups, said Vitor Gaspar, Director of the Fiscal Affairs Department at the IMF.
“The first lesson one year into COVID-19 is that fiscal policy can act timely and decisively. The fiscal policy response was unprecedented in speed and size looking across countries. We also learned that countries with easier access to finance or stronger buffers were able to give more fiscal support. They’re also projected to recover faster,” said Gaspar.
Average overall deficits as a share of GDP in 2020 reached 11.7 percent for advanced economies, 9.8 percent for emerging market economies, and 5.5 percent for low-income developing countries. Countries’ ability to scale up spending has diverged.
“So, what have we learned? We’ve learned that fiscal policy is powerful and that sound public finances are crucial in order to enable that power to be used to the fullest,” stressed Gaspar.
Gaspar urged policy makers to balance the risks from large and growing public and private debt with the risks from premature withdrawal of fiscal support, which could slow the recovery.
“In the spring 2021, we emphasize differentiation across countries. Moreover, COVID-19 is fast evolving, as are the consequences from COVID-19. The fiscal policy must stay agile and flexible to respond to this fast-evolving situation.” Said Gaspar.
He also warned that the targeting of measures must be improved and tailored to countries’ administrative capacity so that fiscal support can be maintained for the duration of the crisis—considering an uncertain and uneven recovery
“Moreover, countries are very different in their structures, in their institutions, in their financial capacity and much else. Therefore, policies and policy advice have to be tailored to fit.” Said Gaspar
Gaspar concluded his remarks by emphasizing that global vaccination is urgently needed, and that global inoculation would pay for itself with stronger employment and economic activity, leading to increased tax revenues and sizable savings in fiscal support.
“A fair shot, a vaccination for everybody in the world may well be the highest return global investment ever. But the Fiscal Monitor also emphasizes the importance of giving a fair shot at life success for everyone. It documents that preexisting inequalities made COVID-19 worse and that COVID-19 in turn made inequalities worse. There is here a vicious cycle that threatens trust and social cohesion. Therefore, we recommend stronger redistributive policies and universal access to basic public services like health, education, and social security,” said Gaspar.
Finance2 weeks ago
List of Microfinance Banks’ USSD Codes In Nigeria
Cryptocurrency4 weeks ago
Zugacoin that Plunges Over 99 Percent in 6 Days Partners Innoson, Buy Innoson Products With Zugacoin
Government4 weeks ago
Telcos To Begin Disconnection of Banks’ USSD Services Monday Over N42B Debt
Government4 weeks ago
FEC Approves $1.5 Billion For Repair of Port Harcourt Refinery
News3 weeks ago
Focus on bank MDs, Others, Workers Reply EFCC Over Asset Declaration
Government4 weeks ago
Money Meant For Arms Missing Under Buratai, Ex-Service Chiefs —NSA
News4 weeks ago
WHO Says It’s Investigating Reports of Blood Clots in People Who Got AstraZeneca COVID-19 Vaccine
Government3 weeks ago
US Intelligence Says ISIS and Al-Qaeda Are Planning to Attack Southern Nigeria