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Nigeria Makes Progress in Crude Oil Sale, Rakes Additional N363bn in Three Months

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Crude oil - Investors King

The Federal Ministry of Petroleum Resources has disclosed that Nigeria is recording success in oil earnings as a result of improvements in security in the Niger Delta region.

This is coming as the country made an additional N363bn from crude oil sales in the months of October, November and December 2022.

Recall that crude oil theft and pipeline vandalism in the Niger Delta region have been hampering efforts at making huge outputs in oil production.

Owing to Insecurity around the oil production region, the nation has been recording low oil earnings, a development that has been a worry to the Federal Government.

To nip the ugly development in the bud, President Muhammadu Buhari recently read a riot act to criminals and ordered security agencies to eradicate crude oil theft and pipeline vandalism in the Niger Delta before his administration winds-off.

Buhari promised to improve the country’s oil productivity before he leaves office in May, this year, stressing that he would not tolerate the criminality any longer.

Giving the directive through the Minister of State for Petroleum Resources, Chief Timipre Sylva, while addressing troops of the Joint Task Force Operation Delta Safe in Effurum, Delta State, and Port Harcourt, Rivers State, the President directed security agencies to up their game and ensure no litre of crude oil is stolen across the oil-producing states.

It was gathered that prior to the renewed efforts of the Federal Government in battling crude oil thieves, the nation’s daily crude oil production was about 900,000 barrels per day.

But with the recent improvements in security efforts, there has been an increase in oil output, as production has risen to about 1.5 million barrels per day, according to the statement.

“I am happy to hear that morale is high here. We were here a few months ago to hand over the mandate of Mr. President to you and that is to ensure that there is zero tolerance for crude oil theft in the region,” Sylva had said.

The increased output in oil production has improved the country’s earnings from crude oil sales, even though Nigeria still expends billions of naira as petrol subsidy.

While attesting to progress being made in tackling oil theft and pipeline vandalism, the petroleum ministry, in figures it released, disclosed that the country’s oil production appreciated by 1.014 million barrels per day in October, representing an increase of 0.077mbpd when compared to the 0.937mbpd output in September.

The statistics further revealed that in November, the country pumped 1.185mbpd crude, indicating an increase of 0.171mbpd when contrasted with the daily output in October.

Oil production increased in December, 2022, as Nigeria produced 1.253mbpd, a development which indicated an increase of 0.05mbpd when compared to its output in November.

According to data gotten from two international economic and statistical firms, Statistica and Countryeconomy, the average cost of Brent, the global benchmark for crude,
in the last three months of 2022, was $93.4/barrel, $89.62/barrel and $76.42/barrel respectively.

Since oil production in Nigeria rose by 0.077mbpd in October, this represents an increase of 2.387 million barrels in that month.

At an average crude oil price of $93.4/barrel in the review month, the country is said to have earned an additional $222.95m (N101.02bn, at the official exchange rate of N453.1$) in October last year.

In November, Nigeria’s oil production rose by 0.171mbpd, an equivalent of 5.13 million barrels in that month, while the average price of crude in the same month was put at $89.62/barrel.

As Nigeria’s oil earnings increased by $459.75m (N208.31bn at the Central Bank of Nigeria official exchange rate of N453.1/$), oil output from Nigeria grew by 0.05mbpd, representing 1.55 million barrels for December 2022, while the average cost of Brent was $76.42/barrel.

To this end, the Federal Government’s revenue from crude oil export last month grew by $118.45m (N53.67bn at the official exchange rate of N453.1/$).

 

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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