- Oil Exemption: Nigeria, Libya Know Fate Soon
Will Nigeria and Libya continue to enjoy their exemption from the oil production cut deal? Or, will the two members of the Organisation of Petroleum Exporting Countries (OPEC) be asked to seal their production quotas? They are to know their fate soon.
Both countries were on November 30, last year, exempted from the oil production cut deal with non-OPEC countries. The implementation of the decision began on January 1, this year. Nigeria and Libya have been invited to participate in the producer group’s latest ministerial committee meeting scheduled for September 22.
The two countries have been invited to the meeting billed for Vienna, Austria for a review of the latest developments in their oil sectors, Kuwait’s OPEC Governor Haitham al-Ghais told Al-Rai newspaper.
Going by the account of the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, Nigeria’s oil production, including crude oil and condensates, is between 2.2 million and 2.3 million barrels per day (bpd). Ccondensates, according to him, accounts for about 300,000bpd to 400,000 bpd.
The latest S&P Global Platts OPEC survey in Bloomberg report said the Libyan output recovered to reach an average of 990,000 bpd in July, its highest level in three years up from 180,000 b/d in June.
This was before the closure of three fields, including the 300,000 bpd Sharara, 90,000bpd El-Fil and 10,000 bpd Hamada fields, shutting-in around 360,000 bpd of output since the middle of last month.
OPEC is expected to consult with Nigeria and Libya to identify their plans, Ghais said. The group will hold a technical committee meeting on September 20, looking at the continued effects of the United States (U.S.) shale oil on the global market and the impact of Hurricane Harvey.
Ghais said: “The amount of production affected by the hurricane is estimated at 700,000bpd, which may strengthen the status of the market.”
He added that U.S. production had increased by 500,000bpd so far this year, compared to last year’s.
The September 20 meeting will be followed by another meeting on September 22, where a committee overseeing the deal, composed of oil ministers from Kuwait, Russia, Venezuela, Algeria, Oman and Saudi Arabia.
According to Platts, Saudi Arabia and Russia are seeking to extend the deal for a further three months to June, to demonstrate their commitment to market management and dampen fears that the producers will return to a market-share battle as soon as the deal expires.
But there indications that Libya and Nigeria may be asked to cap their crude oil productions at the meeting.
The two African nations were invited to the committee meeting in St. Petersburg, Russia, on July 24, to discuss the stability of their production. Kuwait Oil Minister, Issam Almarzooq, hinted that the decision would be in an effort to help rebalance the oil market.
Almarzooq, the Chairman of the Committee monitoring the compliance of OPEC and non-OPEC suppliers with output cuts, confirmed this in an interview with a news agency in Istanbul, Turkey.
“We invited them 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”, Almarzooq said, in reference OPEC’s upcoming meeting scheduled for November 30.
Nigeria and Libya were exempted from the cuts due to disruptions of oil production by militants in the Niger Delta. The agitations of the restive militants and the internal crisis in Libya, led to serious drop in oil output in both countries.
However, productions have improved following negotiations with leaders from the region. The Pan Niger Delta Development Foundation (PANDEF) has been negotiating with the Federal Government as part of efforts to restore peace to the oil producing region.
In Libya, the oil output has climbed to more than one million barrels a day for the first time in four years, while Nigeria’s production rose by 50,000 barrels a day in June, according to the Bloomberg survey.
Abdulsamad Al-Awadhi, a London-based analyst and Kuwait’s former representative to OPEC, said capping Libya and Nigeria might help but would not cut the supply by much.
Al-Awadhi: “OPEC needs to have better compliance, and it must respect the right of Libya and Nigeria to go back to the market.
“Other countries that raised output while Libya and Nigeria are out should do more and give space to these two countries to go back to the market.”
The decision to grant Libya and Nigeria exemptions to production cuts was a collective decision, and any proposal to include them in OPEC’s plans will also require a joint decision, Secretary-General Mohammed Barkindo told reporters at an event in Istanbul.
OPEC oil output rose in June by 280,000bpd to a 2017 high, a Reuters survey showed, which was due to further recovery in supply from the two member countries’ exclusion from a production cut deal.
High compliance by Gulf producers, Saudi Arabia and Kuwait, helped keep OPEC’s adherence with its supply curbs at a historically high 92 per cent in June, compared to 95 per cent in May, the survey discovered.
But extra oil from Nigeria and Libya, exempted from the cut because conflict curbed their output, means supply by the 13 OPEC members originally part of the deal has risen far above their implied production target.
The recovery adds to the challenge the OPEC-led effort to support the market is facing from a persistent inventory glut. If the recovery lasts, calls could grow within OPEC for the exempt countries to be brought into the production deal.
“The rise in OPEC production will further delay the point at which balance is restored on the oil market,” said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.
OPEC and non-OPEC members agreed to cut oil production at its meeting in Vienna, Austria on November 30 last year. This was fallout of an agreement by OPEC members at a meeting in Algiers, Algeria on September 28 to limit supply with special conditions given to Libya, Nigeria and Iran, whose output has been hit by wars and sanctions. The agreement was tagged ‘Algiers Accord.’ The production cut agreement, which began January 1, calls on OPEC’s 14 members along with 10 non-OPEC countries, led by Russia, to cut a combined 1.8 million bpd in output through March.
With the production cut, oil prices spiked above $50 per barrel but within the past few months, prices had slipped below $50 per barrel due to market oversupply and increased output from U.S.’ shale.
OPEC oil output in July rose by 90,000 bpd to a 2017 high, a Reuters’ survey showed. The rise was due to a further recovery in supply from Libya. A dip in supply from Saudi Arabia and lower Angolan exports, however, helped to boost OPEC’s adherence to its supply curbs to 84 per cent. While this is up from a revised 77 per cent in June, compliance in both months has fallen from levels above 90 percent earlier in the year.
According to the Head, Energy Research Desk of Ecobank Group, Mr. Dolapo Oni, the production cut deal has advantage and disadvantage.
He said that as the production cut boosts price, such increase in price also puts shale production in an advantage production. As the price of crude oil rises, it makes the production of shale profitable and competitive.
COVID-19 Wiped Off $5B Diaspora Remittances, Says FG
The Federal Government said that the COVID-19 pandemic has wiped off 20 percent of the $25bn annual diaspora remittances to Nigeria.
The government noted that various targeted programmes were being implemented to shore up the deficit.
Disclosing this at a press briefing in Abuja on Thursday to announce the 2021 Diaspora Day celebration scheduled for July 25, the Chairman, Nigerians in Diaspora Commission, Abike Dabiri-Erewa, said the home remittances were over 83 percent of the national budget and 6.1 percent of the Gross Domestic Product.
The World Bank had said remittances by Nigerians in the Diaspora declined by 27.7 percent in 2020. It had also put remittances into the country in 2019 at $21.45bn.
She explained that the remittances serve as economic buffers and safety nets to families for school fees, feeding, hospital bills and many other social support systems.
According to her, 30 percent of the remittances are channeled into investments including real estate, commercial businesses and others.
Responding to a question on the impact of the pandemic on the remittances, Dabiri-Erewa stated, “The COVID-19 pandemic has reduced the annual Diasporan remittances by 20 percent but doesn’t forget that we are also coming up with different programmes.
“Remittances actually go to support families but we are having targeted programmes from the diaspora, particularly housing which would be unveiled that day.”
The NIDCOM chairman stressed that the nation could not afford to ignore about 17 million Nigerians living outside the sovereign boundaries of the nation, sending home remittances of about $25 billion annually.
She noted that the National Diaspora Day 2021 celebration themed: ‘Diaspora integration for national peace and development’, would anchor on peace to accelerate diaspora engagement for national growth and development, adding that no nation succeeded in an atmosphere of insecurity, hatred and divisive tendencies.
Due to the COVID-19 pandemic and its consequences, Dabiri-Erewa explained that the diaspora day 2021 would be celebrated via a webinar and would feature the presentation of the recently approved National Diaspora Policy, nomination for awardees for the proposed National Diaspora Merit Award, presentation from the Diaspora Investment Summit Initiative, among other activities.
The President, Muhammadu Buhari, and other dignitaries, including the Deputy Secretary-General, United Nations, Dr Amina Mohammed; the Director-General, World Trade Organisation, Dr Ngozi Okonjo-Iweala and others will address the participants.
Nigeria Experience Worst Unemployment In A Decade, As More Youth Seek Migration To Escape Poverty – World Bank
The World Bank affirmed that Nigeria is currently going through one of its worst unemployment crises in recent times.
“Nigeria is facing one of the most acute jobless crises in recent times. Between 2014 and 2020, Nigeria’s working-age population grew from 102 million to 122 million, growing at an average rate of approximately 3 percent per year, the multilateral lender said in its latest report on Nigeria.
“Similarly, Nigeria’s active labour force population, that is, those willing and able to work among the working-age population, grew from 73 million in 2014 to 90 million in 2018, adding 17.5 million new entrants to Nigeria’s active labour force.
“Since 2018, however, the active labour force population has dramatically decreased to around 70 million—lower than the level in 2014— while the number of Nigerians who are in the working-age population but not active in the labour force has increased from 29 million to 52 million between 2014 and 2020.
“The expanding working-age population combined with scarce domestic employment opportunities is creating high rates of unemployment, particularly for Nigeria’s youth,” the World Bank report noted.
However, between 2010 and 2020, the international financial institution estimated that the unemployment rate rose five-fold, from 6.4 percent in 2010 to 33.3 percent in 2020, with the rates being particularly acute since the 2015/2016 economic recession and further worsened as COVID-19 led to the worst recession in four decades in 2020.
Increasingly, it noted that educated Nigerians were struggling to find employment opportunities in the country while unemployment rates increased substantially for Nigerians across all education levels over the years, becoming progressively challenging for educated Nigerians to find employment opportunities.
“Combined with significant demographic changes and increased aspirations of the youth, Nigeria’s unemployment crisis is creating migratory pressure in the economy.
“Unemployment is considered to be a key driver of migration. Consequently, multiple surveys show that the number of Nigerians, who are looking to migrate internationally is high and increasing,” it pointed out.
In the last few years, the bank stated that the number of persons eager to migrate has increased from 36 percent in 2014, to 52 percent in 2018, noting that the desire to migrate remains higher among unemployed (38 percent), youth (39 percent), secondary education graduates (39 percent), urban residents (41 percent) and post-secondary graduates (45 percent) in Nigeria.
It maintained that since there has not been an expansion of legal migration routes for youth increasingly eager to find opportunities in the overseas labour market, young Nigerians are opting for irregular migration routes to realise their hopes for a better life.
“What is worrying, however, is the increase in the number of forced and irregular migrants from Nigeria, “ it disclosed.
According to a new report by the multilateral lender, the socio-economic challenges facing Nigerians in the last 10 years have led to an astronomical increase in the number of citizens seeking asylum and refugee status in other countries.
The World Bank further estimated that there were 2.1 million Internally Displaced Persons (IDPs) in Nigeria in 2020 alone.
The, however, blamed a combination of rising unemployment, booming demographics, and unfulfilled aspirations as resulting in increasing pressure on young Nigerians to migrate in search of gainful employment overseas.
In addition, the Washington-based institution disclosed that the number of international migrants from Nigeria has increased threefold since 1990, growing from 446,806 in 1990 to 1,438,331 in 2019.
It explained that despite this trend, the share of international migrants as a proportion to Nigeria’s population has remained largely constant, increased slightly from 0.5 percent in 1990 to 0.7 per cent in 2019.
The lender said the recent rise in irregular migration notwithstanding, the share of international migrants in Nigeria’s population was much lower compared to the shares in Sub-Saharan Africa and globally.
The data showed that the number has risen by over 1,380 percent in the years between 2010 and 2019, indicating that in comparison, the number of persons coming into Nigeria from outside has been relatively stagnant in the decade under consideration.
“An important trend that is observed in the data is the rise in the number of refugees and asylum seekers from Nigeria. The share of refugees and asylum seekers from Nigeria has increased drastically in the last decade, growing from 27,557 in 2010 to 408,078 in 2019,” it stated.
It noted that although the country was reaping dividends from the success of its citizens in the diaspora, which was put at five percent of its Gross Domestic Product (GDP) in 2019, when it comes to the discourse on international migration, the narrative has not been palatable.
It stressed that to ensure mutual cooperation, the European Trust Fund for Africa (EUTF), which was established in 2015, with the aim to promote areas of mutual development interest between Europe and Africa, has since provided more than €4 billion in aid to African countries to address various development-related challenges and priorities in Africa.
Since its inception, the EUTF, the bank stated, has provided more than €770 million for migration-related projects in Nigeria, with most of the funds invested in border control measures, awareness campaigns to stop trafficking, and the creation of jobs domestically, including for returned Nigerian migrants.
While predicting that by 2100, Europe’s working age population between the ages of 20 and 64 would decline by 30 percent owing to low birth-rates and increased longevity, it further projected that at same time, the working age-population in Nigeria could increase by 140 percent.
“By expanding legal pathways for migration and implementing supporting measures to reap dividends from current migrants in the diaspora, Nigeria can further benefit from international migration.
“Nigeria’s institutions are well-placed to promote managed migration approaches that help create opportunities for prospective Nigerian job seekers to find employment internationally and can be supported to help design schemes that increase the returns to human capital investments for Nigerian youth,” the report concluded.
African Development Bank Group and Ethiopia Sign $118 Million Grant Agreement to Support Agro industrial park, Youth Employment
The African Development Bank Group and the Government of Ethiopia have signed two separate grant agreements for new projects to boost youth employment and electricity trade between Ethiopia and Djibouti.
The grants fall under the Bank Group’s concessional lending window, the African Development Fund, and will go towards the Productivity Enhancement to Support Agro Industrial Parks and Youth Employment Project worth $47 million, and the $71 million Ethiopia-Djibouti Second Power Interconnection Project, which aims to boost electricity trade between Ethiopia and neighbouring Djibouti.
The industrial parks and youth project will see the development of irrigation and water management infrastructure around the Integrated Agro-Industrial Parks, offering opportunities for graduate “agri-preneurs” to establish agro-related, commercially viable businesses. The $102 million venture is being co-financed with the Arab Bank for Economic Development in Africa (BADEA), with a $5.25 million contribution by the Ethiopian government.
Under the scheme, 12,607 ha of irrigated land would be developed and about 3,000 youths will receive both agronomic/agriculture and business development training. Bank financing is expected to cover 4,607 ha and BADEA financing another 8,000 ha.
The irrigation infrastructure will strengthen water users’ associations; protect the water-shed areas around the irrigation schemes; go towards training farmers and youth agri-preneurs on soil and water conservation practices, agricultural production, value addition and marketing; and support established youth SMEs to access credit.
The project will be implemented over a five-year period (2021-2026) under the supervision of the Ministry of Water, Irrigation and Energy and the country’s Irrigation Development Commission.
The Ethiopia-Djibouti Second Power Interconnection Project follows an earlier Bank-financed power interconnection project between the two countries, and builds on its accrued benefits over the last 10 years. It will enable the construction of about 300 km of interconnector lines, 170 km of transmission lines to reinforce the network within Ethiopia, and new construction and expansion of substations in the two countries. In Djibouti, expected benefits include a 65% increase in customer connections and a sharp reduction in the use of thermal generation plants from 100% to around 16%. In Ethiopia, the project would lead to higher incomes from the power trade which over the last 10 years stood at over $275 million in revenue from power exports.
Upon completion, Ethiopia’s revenue from power exports will increase, while at the same time boosting Djibouti’s access to reliable, affordable, and clean electricity and lowering its greenhouse gas emissions.
“By enhancing economic ties through increased cross-border power trade and improved economic competitiveness, the project will contribute towards harnessing regional peace and stability and addressing regional fragility,” said Dr. Abdul Kamara, Deputy Director General, East Africa Regional Development and Business Delivery Office of the African Development Bank.
The Board of Directors of the African Development Bank Group approved funding of both projects on 7 July 2021. The grant agreements were signed on 21 July 2021 by Ethiopian Finance Minister Ahmed Shide, and Kamara.
The African Development Bank is a major player in Ethiopia’s development agenda and currently has operations valued at about $1.76 billion, covering basic services, energy, transport, water supply and sanitation, agriculture, governance, and the private sector.
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