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Economy

Oil Price Drop Below Nigeria’s 2019 Benchmark

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Oil Jump Jack
  • Oil Price Drop Below Nigeria’s 2019 Benchmark

Oil price dropped below Federal Government’s $60 per barrel benchmark for the 2019 budget.

Brent crude, against which Nigeria’s crude oil is priced, rose from $60.77 a barrel it closed in the week ended September 11, 2019 to $69.64 a barrel on September 16 after Saudi Aramco was attacked by Yemeni rebels.

The Iran-backed Houthi erased about 5.7 million barrels per day (mbpd) in Saudi Arabia’s crude oil production, leading to oil experts projecting a continuous increase in oil price as they doubted Saudi’s ability to resume full production in the near-term.

The world’s largest crude oil exporter, however, assured the market of its ability to restore production back to full capacity as early as the end of September and promised to increase it from the preattack level of 9.8 mbpd to about 11 mbpd in October, none of which has happened.

On Tuesday, during the Asian trading session, Brent crude declined to $58.83 a barrel, below Federal Government’s $60 per day stipulated in 2019 budget.

Oil has now erased the almost 20 per cent jump in price recorded in September as global growth continues to weigh on commodity prices despite Saudi Arabia reassurance.

While lower prices would help consumer spending and savings in most economies, analysts said weak global growth would offset some of those gains.

In Nigeria, the case is different as budget deficit would surge, compelling Federal Government to take more loan to fund its over N8 trillion 2019 budget.

Accordingly, foreign revenue generation would drop and subsequently impact the central bank’s ability to intervene in the foreign exchange section of the economy or support the struggling local currency.

Still, the cost of subsidizing fuel for the Nigerian people would drop with a fall in oil price.

According to the former Minister of State for Petroleum, Dr Ibe Kachikwu, Nigeria spends N1.86 billion on fuel subsidy per day.

While the Petroleum Products Pricing Regulatory Agency (PPPRA) disclosed that the nation’s daily consumption rose by 2 million litres in 2019 to 56 million. A number disputed by most experts and of recent, Mr Femi Falan, a human rights lawyer, had requested for details of fuel imports.

Falana, in letter to the Nigerian National Petroleum Corporation last year, stated that the corporation had put the nation’s daily consumption at 28 million litres and subsidy cost at N726 million per day (N261.4 billion per annum) in 2017 but barely a year later the corporation claimed daily consumption had surged to over 50 million litres and that $5.8 billion or N1.7 trillion was spent on fuel importation between January and February 2018.

He said a few months later, Kachikwu claimed it has jumped again to almost 60 million litres.

“In December 2017, the management of the NNPC disclosed that the nation’s consumption rate of fuel was 28 million litres per day and that subsidy cost was N726m per day, i.e., N261.4bn per annum. But on March 5, 2018, the Group Managing Director of the NNPC, Dr Maikanti Baru, claimed that the figure had metamorphosed to 50 million litres per day and that the NNPC had spent $5.8bn (N1.7tn) on fuel importation in January and February 2018,” Falana stated.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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Economy

NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021

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The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.

This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).

The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.

It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.

NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.

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Economy

Nigeria’s Food Inflation Hits 22.95 Percent in March 2021

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Food inflation in Africa’s largest economy Nigeria rose by 22.95 percent in March 2021, the latest report from the National Bureau of Statistics (NBS) has shown.

Food Index increased at a faster pace when compared to 21.70 percent filed in February 2021.

Increases were recorded in Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetable, Fish, Oils and fats and fruits.

On a monthly basis, the food sub-index grew by 1.90 percent in March 2021. An increase of 0.01 percent points from 1.89 percent recorded in February 2021.

Analysing a more stable inflation trend, the twelve-month ended March 2021, showed the food index averaged 17.93 percent in the last twelve months, representing an increase of 0.68 percent when compared to 17.25 percent recorded in February 2021.

Insecurities amid wide foreign exchange rates and several other bottlenecks that impeded free inflow of imported goods were responsible for the surged in prices of goods and services in March, according to the report.

The Central Bank of Nigeria-led monetary policy committee had attributed the increase in prices to scarcity created by the intermittent clash between herdsmen and farmers across the nation.

However, other factors like unclear economic policies, increased in electricity tariffs, duties, subsidy removal and weak fiscal buffer to moderate the negative effect of COVID-19 on the economy continue to weigh and drag on new investment and expansion of local production despite the Federal Government aggressive call for improvement in domestic production.

Nigeria’s headline inflation rose by 18.17 percent year-on-year in the month under review.

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