- Preparing Nigeria for Possible Crude Oil Production Cut
A capping or reduction in Nigeria’s crude oil output is likely going to happen soon and this will impact the economy adversely considering the economic significance of the commodity, stakeholders have said.
Earlier this week, it was reported that the Organisation of Petroleum Exporting Countries may ask Nigeria and Libya to cap their crude oil output soon in an effort to help re-balance the global crude oil market.
This is because the two countries had boosted oil production since they were exempted from the global cuts led by the OPEC and other producers.
OPEC and non-OPEC producers have invited the two African nations to their committee meeting in St. Petersburg, Russia, on July 24, 2017, to discuss the stability of their production, according to the Kuwait Oil Minister, Issam Almarzooq.
Almarzooq is also the chairman of the committee monitoring the compliance of OPEC and non-OPEC suppliers with output cuts that started in January to the extended date of March 2018.
To cushion the effect of an imminent cut in Nigeria’s crude production on the economy, stakeholders and operators in the oil sector urged the Federal Government to start implementing measures that would boost economic activities outside oil export.
They noted that the exemption of Nigeria by OPEC with respect to capping its crude production might end anytime soon, judging by the recent comments of the oil cartel’s official.
Almarzooq had earlier said, “We (OPEC) invited them (Nigeria and Libya) to discuss the situation of their production. If they are able to stabilise their production at current levels, we will ask them to cap as soon as possible. We don’t need to wait until the November meeting to do that.”
Crude price sank into bear territory last month amid concerns the cutbacks by OPEC, Russia and other allies were being partially offset by a rebound in supply by Libya, Nigeria and United States’ shale output. Libya and Nigeria were exempted from the cuts due to their internal strife.
“Any cut in Nigeria’s crude output will, of course, impact negatively on our economic activities because oil is the mainstay of this economy,” a former President, Association of National Accountants of Nigeria, Dr. Samuel Nzekwe, said.
He added, “This is why the government must now begin to look inwards to get money and we can see that they are trying to do so through taxation using the Federal Inland Revenue Service. Also, we’ve been hearing about yam export from Nigeria recently, which is geared towards earning more foreign exchange.
“So it is no gainsaying to state that Nigeria must make all necessary preparations to mitigate the severe impact of a possible cut in crude output. For if there is any cut or if Nigeria is asked to put a cap to its crude oil production, it is going to hit the country seriously.”
Nzekwe noted that this was another reason why some government officials often talked about borrowing, but was quick to state that the notion had been criticised in some quarters, as the cost of servicing such loans was high.
“It is therefore glaring that presently we are having financial problems as a country and if you now cut our crude production output, then there is going to be more economic chaos for us in Nigeria,” he said.
On the way forward should the global oil cartel ask Nigeria to cap its crude production, Nzekwe said, “I think what we should do now is to further ascertain how to generate more funds internally and also export more of our products, both raw and manufactured goods. If we don’t do this, at the end of the day we will find ourselves in a very big mess.
“There is need for an enabling environment that will allow businesses to thrive. The manufacturing sector of the economy must be allowed to thrive. We must look at what to do in order to start importing less and produce more of what we consume in Nigeria.”
He added, “If we do that, even if there is a cap or reduction in our supply of oil, we will not feel the impact as being that severe. But because virtually all we use in Nigeria today are imported, we spend the limited foreign exchange we have on these imported items and deplete our reserves.
“If we have food security, if manufacturers are producing more than 70 per cent of what we need in Nigeria and we export more than we import, then there will be less cause for worry. So Nigeria should see the possibility of cutting its crude production as a warning and must be prepared to adjust aright.”
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had earlier hinted that OPEC might ask the country to cut its production output.
He stated that the country was open to such request, adding that it was the responsibility of member countries to do all that was necessary to ensure stability in crude oil prices.
The minister said, “Serious members of OPEC will support the cuts when we are sure that we can have a stable and predictable production. Yes, we’ve got 1.7 million barrels production daily, but it is still below the 1.8 million barrels that was used as benchmark for us at OPEC.
“But the reality is that this is a very difficult terrain and we’ve got to watch it for a couple of months to be sure that what you see is quite sustained. We will ultimately find stability in this market. Nigeria will do whatever it takes to help that stability.”
Kachikwu, however, expressed hope that oil prices might stabilise later this month or in August, adding that conversations with other OPEC members would determine to what extent Nigeria would have to support in stabilising crude prices globally.
“I’m sure that by the time I have conversations with my colleagues, we will determine at what time frame we will see Nigeria coming in, with a lot more predictive analysis of what our market is looking like and what we need to do to further help. Hopefully by then, we would have been out of the price uncertainties that we are seeing today,” he added
The oil minister explained that Nigeria and Libya came into focus after they seemed to resolve some of the political challenges that had slashed their production.
Libya’s oil output climbed to more than one million barrels per day for the first time in four years, while Nigeria’s production rose by 50,000 barrels per day in June, according to a Bloomberg survey.
Giving that Libya and Nigeria’s exemptions to production cuts was a collective decision, and any proposal to include them in OPEC’s plans would also require a joint decision, the Secretary-General, OPEC, Mohammed Barkindo, told reporters at a recent event in Istanbul.
Barkindo, however, noted that it was still too early to discuss steeper cuts by the group and its allies.
On whether the crash in crude oil price and the likely call by OPEC for a reduction in Nigeria’s oil production would impact the implementation of the country’s 2017 budget, Kachikwu replied, “In terms of the budget impact, definitely.”
He added, “The Ministry of Finance is looking for ways to cover some of this shortfall and part of that is efficiency, like how to cut down our expenditures. So the budget will be impacted.
“We are working hard at the Federal Executive Council to see how we can forecast or predict that sort of impact in order to see how we can cover them.”
Another petroleum analyst, Mr. Bala Zakka, told our correspondent that the Federal Government must look at ways to mitigate the harsh economic realities that would follow any likely cut in crude output by Nigeria.
to him, most Nigerians were already suffering the negative effect of an economy that is in recession. He noted that it would be too much to bear if no concrete step was taken to cushion the effect of a reduction in Nigeria’s crude oil production.
India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS
India, Spain and the Netherland top Nigeria’s export markets in the final quarter of 2020, according to the latest data from the National Bureau of Statistics (NBS).
The Commodity Price Indices and Terms of Trade Q4 2020 report showed that the United States and China trailed the three.
However, the NBS revealed Nigeria exports mainly crude oil and natural gas during the period under review.
It, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.
“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”
The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.
“This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.
The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.
Onyeama: Qatar To Invest $5bn In Nigeria’s Economy
The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.
Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.
The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.
According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”
He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.
Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.
The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.
He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.
‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”
Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.
Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’
In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.
‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.
Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.
Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.
The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.
Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.
According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.
The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.
He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.
France, Nigeria to Build New Partnership
France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.
Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.
A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.
“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”
It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.
It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.
It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.
It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”
Finance2 weeks ago
List of Microfinance Banks’ USSD Codes In Nigeria
Government4 weeks ago
FEC Approves $1.5 Billion For Repair of Port Harcourt Refinery
News4 weeks ago
Focus on bank MDs, Others, Workers Reply EFCC Over Asset Declaration
Government3 weeks ago
US Intelligence Says ISIS and Al-Qaeda Are Planning to Attack Southern Nigeria
Government4 weeks ago
Customers TO Pay N6.98 Per USSD Transaction – CBN, NCC
News4 weeks ago
EFCC Directs Bankers to Declare Assets by June 1
Banking Sector4 weeks ago
GTBank Records N201.4 Billion Profit After Tax in 2020
Fintech4 weeks ago
Stripe’s Valuation Hits $95 Billion After Raising Another $600 Million