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The Nigerian National Petroleum Corporation on Wednesday deplored the recent increase in attacks on crude oil and gas pipelines, saying it was adversely affecting the nation’s economy.

This was contained in a statement in Abuja by the Group General Manager, Group Public Affairs Division, NNPC, Mr Ohi Alegbe.

Alegbe said the nation lost about 60,000 barrels of crude oil per day to acts of vandalism on its pipeline.

He added that the sudden increase in the activities of saboteurs around the Trans-Forcados Pipeline and the Escravos-Lagos Pipeline in the last six weeks was shocking.

He said the Escravos-Lagos Gas Pipeline was vandalised with four breaks over the weekend.

“The act had robbed the nation of several billions of naira to the detriment of the national economy.

“NNPC loses between 50,000 and 60,000 barrels of crude oil and condensate on a daily basis to pipeline breaks,” he said.

NAN reports that at $53 per barrel, Nigeria loses about $3.2m (about N534.3m) per day to oil theft.

The NNPC spokesman said there appeared to be a syndicate behind the economic sabotage.

Alegbe stated that most of the power plants, including those in Calabar, Alaoji, Omoku and Olorunsogo had been connected to gas.

He said all the efforts of the Federal Government to construct unprecedented massive gas pipeline infrastructure were being sabotaged by pipeline vandals.

He noted that it was unfortunate that between January and early February 2015 alone, the Trans-Forcados Crude Pipeline was attacked and vandalised four times.

Alegbe said none of NNPC’s gas pipelines had been able to run two straight days without being brought down.

He added that the corporation was exploring a number of options on how to tackle the menace of pipeline vandalism.

He said the options ranged from an aggressive community engagement to installation of technological gadgets to stave off the vandals.

Russian oil production remained near the post-Soviet record reached last month, as the collapse of crude prices since June has so far failed to visibly disrupt growth, and exports jumped.

The country’s output dropped less than 0.1% from December to 10.657 MMbopd, according to preliminary data emailed from the Energy Ministry’s CDU-TEK group. Oil prices have fallen to the lowest since 2009 amid surging U.S. output and a November decision by OPEC to abandon its role as the global swing producer.

Russia, which depends on the oil and natural gas industry for half of its budget, is on the brink of a recession, pressured by crude’s bear market and U.S. and European Union sanctions. Crude output will probably remain on par with 2014, although the current low prices present a risk, Energy Ministry Alexander Novak said last month, citing producers’ plans.

Selling oil abroad is probably more profitable for some producers than domestic sales, given lower prices, Transneft CEO Nikolay Tokarev told Bloomberg on Friday. “We already feel this tendency in January.”

U.S. and EU sanctions in response to Russia’s annexation of Crimea last year and what they say is President Vladimir Putin’s support for separatists in eastern Ukraine are unlikely to affect Russia’s production of conventional oil until 2035, Vladimir Drebentsov, BP Chief Economist for Russia and CIS, said in mid-January. The U.S. and EU are targeting the energy sector by banning exports of equipment and technology used to tap hard-to-extract crude and offshore resources in the Arctic.

Exports Surge

Oil exports rose to 5.26 MMbpd in January, up 24% from a month earlier, as the government changed the tax rate to calculate customs duties.

Brent crude, used to price about half of the world’s oil including Russia’s main export blend Urals, fell as much as 3% on Monday to $51.41/bbl on London’s ICE Futures Europe exchange. Its 2014 peak was $115.71 in June.

The previous post-Soviet oil production record was 10.66 MMbpd in December, CDU-TEK data show. Soviet-era crude and condensate production peaked at 11.48 MMbpd in 1987, according to BP Plc data.

The CDU-TEK output figure shows crude and condensate, an ultralight oil that yields a greater proportion of high-value fuels.

Exxon Mobil Corp. reported a steep drop in fourth-quarter profit that still handily beat expectations as the rout in oil prices ushered in an era of frugality for an industry that reaped $3.2 trillion in sales last year.

Exxon’s net income fell to $6.57 billion, or $1.56 a share, from $8.35 billion, or $1.91, a year earlier, the Irving, Texas-based company said in a statement Monday. Per-share earnings were 22 cents above the $1.34 average of 19 analysts’ estimates compiled by Bloomberg.

Exxon, the world’s biggest oil producer by market value, follows Chevron Corp., ConocoPhillips and other oil titans in posting deep profit declines after a shale-driven supply glut hammered crude prices. Layoffs, drilling delays and more than $40 billion in spending cuts have already been announced as oil companies scramble to ensure they have enough cash on hand to continue shelling out dividends to investors.

“The last thing any of these oil majors want to do is cut the dividend,” said Ed Cowart, who manages $640 million at Eagle Asset Management Inc. in St. Petersburg, Florida. “They’d cut the chairman’s pay before they’d touch the dividend—it’s that important to them.”

Oil producers, drillers, equipment suppliers and steelmakers have slashed tens of thousands of jobs after crude lost almost 60% of its value in seven months, an oil-market slump not seen since the worldwide financial crisis of 2008-2009. Chevron Corp. Chairman and CEO John Watson last week warned that belt-tightening will intensify if the price decline deepens.

Russian Setback

For Exxon, oil’s crash during the second half of 2014 added to the sting of international sanctions imposed against Russia that halted the American company’s exploration ambitions in one of the world’s biggest untapped petroleum caches.

Exxon was forced to halt cooperation with Moscow-based OAO Rosneft on a billion-barrel Arctic Ocean discovery in October after the U.S. and European Union forbade collaboration with Russia’s offshore oil and shale industries. The impact was particularly harsh for Exxon, as Russia represents its largest exploration prospect outside the U.S.

Exxon held 11.4 million acres of Russian drilling rights at the close of 2013, second only to the 15.1 million acres the company held in the U.S., according to U.S. Securities and Exchange Commission filings.

Brent crude, the benchmark for most of the world’s oil, fell 30% to an average of $77.07/bbl during the final three months of 2014. Every $10 drop in crude prices costs the descendant of John D. Rockefeller’s Standard Oil Trust $2.84 billion in annual operating cash flow, according to Barclays Plc.

Exxon released the statement before U.S. equity markets opened. Shares fell 0.2% to $87.42 on Jan. 30 in New York.


Nigeria’s crude oil export is set to increase by about 150,000 barrels per day, as Shell Petroleum Development Company, SPDC, yesterday, announced the reopening of the Nembe creek crude oil pipeline, which was shut down due to sabotage.

Using the current crude oil price of $55 per barrel, this will translate to an increase of $8.25 million, about N1.403 billion in Nigeria’s daily crude oil earnings.

The pipeline, according to a spokeswoman for Shell which carries the Bonny Light crude oil for export, was reopened, weekend.

The pipeline was closed January 17, 2015 due to a leak, with the SPDC removing five oil theft connections during the closure.

According to provisional loading programmes, Nigeria plans to export 188,700 barrels per day (bpd) of Bonny Light in March, up from the 171,000 bpd originally planned in February.

The Trans Forcados oil pipeline, which was shut about the same time with the Nembe creek pipeline has been reopened.

The pipeline, the NNPC said, transports the Forcados crude oil grade in the Niger Delta region and was scheduled to export about 260,000 barrels per day in January and 210,000 bpd in February.

Executive Director, Gas and Power, NNPC, Mr. David Ige, disclosed that the pipeline, which had been shut for about a week due to sabotage, resumed operations a couple of days ago.

Ige explained that the closure of the pipeline network had led to the shut-in of about 200,000 barrels per day of crude export, halved Nigeria’s gas production and deprived two key power plants of gas supply.

Ige said: “Forcados is a major artery. When this pipeline is out we lose gas production. It accounts for 40-50 per. cent of gas production in the country.

Professor Chinedu Nebo, Minister of Power, disclosed that the Forcados pipeline was closed after a leak occurred at the Oteghele axis in the southern state of Bayelsa, adding that there was no timeframe yet for the duration of the disruption.

He appealed for the understanding of electricity consumers, for the reduction in power supply which this development would cause.
Oil prices rally above $53

Meanwhile, crude oil prices rose yesterday as investors shrugged off a US refinery strike and focused on a falling U.S. rig count that signalled lower production down the line.

“There were a lot of people on the sidelines waiting for an opportunity to buy,” said Bjarne Schieldrop, chief commodity analyst at SEB.

“Brent has struggled sideways for a long time but it closed above the 20-day moving average on Friday for the first time since July, and the rig count is falling sharply. So now they think, maybe this is the time to buy.”

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Oil & Gas Industry / Nigerian Refineries’ Capacity to Hit 1MBPD by 2017
« on: February 03, 2015, 09:06:21 AM »
A former General Manager of the Warri Refinery and Petrochemical Company, Mr. Babajide Soyode, has stated that by 2017, Nigerian refineries would have the capacity to process one million barrels of crude oil per day, against the current capacity of 445,000 barrels per day.

Speaking at the 80th Birthday Anniversary dinner, organised in Lagos for the first Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Festus Marinho, the former Warri Refinery boss stated that several plans by government for small refineries would come on stream by 2017.

He noted that Nigerian refineries currently have about 445,000 barrel per day capacity, while Dangote is also putting up 500,000 barrel per day refinery in Lekki which is expected to come on stream by first quarters of 2018.

“There are several plans by government for small distributing refineries to come on stream by 2017. If all this is added together we will have about one million crude oil capacity per day.

I also presume that NNPC is planning to upgrade its refineries by increasing the capacity and modernising the technologies; they have the potential of doubling the capacity from 445,000 to 900,000 barrel per day,’’ he said.

According to him, that was the only way for the NNPC to achieve its target on refined petroleum products in Nigeria.

“Other smaller refineries like Niger Delta Petroleum Resources are also producing about 1,000 barrel per day and is also planning to upgrade to 6,000 barrels per day to produce the full grade. The marginal field producers are also likely to be operating refineries in order to fight the challenges of bunkering of crude on the highland,’’ he said.

On the petrol pump price, Soyode said that the reduction was not the best for now, adding that government ought to have kept the price at N97 per litre.

He said government should have collected N10 per litre as tax and save the money as a buffer for future price fluctuations.
“We are paying a lot on importation of refined petroleum products; the actual cost is more than that because it has been loaded with demurrage, levies and transportation costs. Government should have kept the N10 as a tax and remove subsidy because there is no law on subsidy,” he added

He also insisted that deregulating the downstream sector of the industry remained the lasting solution to oil and gas challenges.

“What has the subsidy contributed to the common man; the common man is more affected; if subsidy is removed, there will be abundant and availability of products at commensurate prices.

Nobody can control pricing in a country where other sub sectors are lacking. Subsidy should be removed and use the money to grow other basic infrastructure in the country; this will make Nigeria a better country. Removing subsidy would translate into better schools, roads, education, hospitals for citizenry. The rich people are the people benefiting more from the subsidy than the common man. Removing subsidy and reducing the level of tax payment on the common man will go a long way in addressing major socio-economic challenges,’’ Soyode said.

In his remark, a former Managing Director of NNPC, Mr. Funsho Kupolokun said that the celebratrant played a vital role in Nigeria's oil industry, adding that his principles and immense contributions remained the driving force of NNPC.

“Marinho is a father of the industry; the man is highly transparent, committed and focused. Marinho has contributed immensely to the growth of the oil and gas industry; he gets things done effectively not like now when petroleum industry bills have been pending for over 12 years,’’ he said.

Chairman of the occasion, Mr. Akintola Williams, who is also the Chairman of Akintola Williams & Deloitte, said that the quality of oil industry operators at the gathering was a demonstration that Marinho was an icon of the oil and gas industry.

Williams stated that Marinho deserved the honour he was given by his friends and loved ones.

“I urge all of you young ones to emulate Marinho's uprightness, obedience, efficiency and commitment to his father’s land,” he said.

Games & Lifestyle / Health Benefits Of Eating Fruits
« on: February 03, 2015, 09:04:11 AM »
10 Healthy Fruits-

1. Banana - Good bananas the exercise and heart disease because there possesses potassium. Eat 2 bananas every day to avoid the pain .

2. Apples - May vitamin C and anti - oxidants apples . Also important to eat the skin of the apple because it reserves pectin that removes dirt in our body . Defenses apples high cholesterol , arthritis and abdominal pain .

3. Acidic fruits like , orange, orange, and grapefruit - Bountiful them with vitamin C and resistance to cold, cough , asthma and arthritis . When eating oranges , also eat the thin fibers ( pulp bits and membrane) because it is good for our stomachs.

4. Strawberry - Experts believe that the strawberry fight cancer . Be careful and have people who are allergic to strawberries. Wash thoroughly before eating .

5. Papaya - High in vitamin A and vitamin C are papaya so it helps our skin . The papaya has papain , a chemical that helps in digestion and in our regular bowel movements. It is also high in fiber .

6. Grapes - Grapes has tannins and flavonoids that can inhibit cancer . If you eat grapes heals diseases . And when anemic and unhealthy , eat grapes to restore your vitality . That is why it give as a gift to those who come in to the hospital . Wash thoroughly before eating .

7. Watermelon and melon - Fighting them with kidney disease and renal ( kidney and bladder infections). The watermelon and melon is full of vitamin C and potassium . And during summer , this is required by our body .

8. Coconut - The coconut juice it helps with kidney stones ( kidney stones ) . Cleaning is also a node of the body .

9. Avocado - The avocado contains good fats and healthy oils . Because of this , it helps in avoiding heart disease and stroke . It also has substance vitamin B6 and vitamin E to smooth the skin . To not wrinkle the face , eat avocados .

10. Pineapple - The pineapple has bromelain that strengthen our immunity. It also has substance manganese and vitamin B that gives strength to the body.

Nigeria is reducing its capital budget for joint venture oil operations by 40% this year to $8.1 billion due to the slump in crude oil prices, sources at the Nigerian National Petroleum Corporation said Monday.

Nigeria, through the NNPC, operates oil joint ventures with multinational companies including Shell, ExxonMobil, Chevron, Total and Eni that account for around half of Nigeria's oil output.

"The NNPC has informed the joint venture partners that this year's capital expenditures will be cut down by 40% from the initial proposed budget of $13.5 billion," an NNPC source said.

"The $13.5 billion has been the level that has been maintained in the past three years, but because of the drastic decline in oil prices that level cannot be sustained this year," the source added.

NNPC did not comment officially.

Under Nigeria's joint venture arrangements, NNPC contributes about 60% of the funding requirement while the foreign firms provide the 40% balance.

Initially, the Nigerian government had proposed Naira 1.22 trillion ($7.5 billion) to fund its share of the oil joint venture operations this year, with the foreign oil firms providing the balance of $6 billion.

"But since this budget was agreed in the last quarter of 2014, there have been drastic changes in the parameters considered by the partners," another NNPC source said.

"Oil prices have falling sharply to around $40 per barrel from $80/b when the joint venture budget was prepared, while general growth in the Nigerian economy has declined below 6% from 6.3%," the source said.

Officials of the Western oil companies confirmed receiving NNPC directives on the budget cut.

"Even though the directive is for joint venture operations, it is generally expected. Oil companies have themselves been revising down their budgets in the light of the oil price slump," an official said.

With the price of oil around $50/b currently, down by more than half from the middle of last year, Africa's top oil producer Nigeria faces growing fiscal challenges as oil accounts for more 70% of the country's revenue.

NNPC chief executive Joseph Dawha last month hinted that three deepwater offshore oil projects and one shallow-water one were at risk of being delayed or canceled outright because of the decline in oil prices.

Meanwhile, Nigeria's oil output declined to 2.15 million b/d at the end of 2014 from 2.26 million b/d at the beginning of the year, according to data released on Sunday by the country's National Bureau of Statistics.

Oil revenues also declined to Naira 2.3 trillion ($13 billion) from Naira 2.6 trillion, as the decline in oil prices took its toll on export earnings, the agency said.

News & Happenings / Nigerians react to Soludo, Okonjo-Iweala controversy
« on: February 02, 2015, 09:05:47 AM »

The Federal Govern­ment’s decision to an­nounce a full blown austerity measure with the sharp drop in crude oil price at the international market may have created more problems for its eco­nomic management team led by former World Bank President , Dr Mrs Ngozi Okonjo Iweala. Although Jonathan’s economic poli­cies have regularly been criticised by many over its several shortcomings. The latest assault by ex Gover­nor of the Central Bank of Nigeria Professor Chukwu­ma Soludo appears to have become the last straw that broke the carmel’s back.

Government apologiests believe it may have been a campaign tool by opposition to further discredit the admin­istration with general elections barely two weeks ahead.

Soludo had in an article titled Buhari Vs Jonathan:Beyound the election, lashed out at the administration of Presi­dent Goodluck Jonathan for mismanaging the economy thereby pauperized more Ni­gerians now than ever before. The professor of economics had listed several areas where he felt that the president’s eco­nomic team failed to rise to the occasion of giving Nigerians a better living standard despite the opportunities it had under the administration.

Specifically,the former CBN Governor alleged that Okonjo-Iweala was instru­mental to the mismanagement of the economy that resulted in the challenges Nigerians are facing today.

‘‘In sum, the mismanage­ment of our economy has brought us once more to the brink. Government officials rely on the artificial construct of debt to GDP ratio to tell us we can borrow as much as we want. That is nonsense, es­pecially for an economy with a mono but highly volatile source of revenue and forex earnings. The chicken will soon come home to roost.

Today, the combined do­mestic and external debt of the Federal Government is in excess of $40 billion. Add to this the fact that abandoned capital projects littered all over the country amount to over $50 billion. No word yet on other huge contingent liabilities. If oil prices con­tinue to fall, I bet that Nigeria will soon have a heavy debt burden even with low debt to GDP ratio,’’Soludo had said in his article.

But in a swift reaction,Okonjo-Iweala, dis­charged all the allegations lev­eled against her by Soludo, saying he bungled the banking  consolidation policy and left an incredible accumulation of liabilities that cost tax payers about N5.67 trillion to resolve.

“After consolidation, the regulatory functions of the Soludo-led CBN were very poorly exercised. As governor, he failed to adequately su­pervise and regulate the now larger banks – an anomaly in financial sector supervision. In fact, as every Nigerian knows, in his time there was very little separation between the regula­tors and the regulated, which is a violation of a key require­ment of central banking suc­cess.

“This led to infractions in corporate governance in many banks as loans and other credit instruments running to hun­dreds of billions of naira were extended to clients without following due process, and several of these loans could not be paid back. This massive accumulation of bad debts or non-performing loans as they are called in the banking sec­tor meant that our banks were ill-positioned to deal with the global financial crisis when it hit.

However, since last week’s fireworks between Prof. Chu­kuma Soludo and the Minister of Finance and Coordinating Minister for the Economy, Dr. Mrs. Okonjo-Iweala, Nigeri­ans have continued to express mixed reactions on the com­ments of the two world class economists.

Reacting to Soludo’s stand on the economy via Twitter,Former Minister of Education and Vice President of the World Bank,Mrs.Oby Ezekwesili, advised Okonjo- Iweala, to redirect her energies towards confronting the issues that have ruined the country’s economy rather than declare war on critics.

Ezekwesili condemned the tone of Okonjo-Iweala’s response to Soludo’s article, saying, more than ever, it pro­vided the justification for calls for urgent national debate on the economy.

“I repeat again, that the ar­ticle by Soludo on the state of the economy is a new opportu­nity for us as a nation to debate not war. To call people names for speaking or asking ques­tions is a waste of time. No name wrongly called can ever become the name rightly giv­en. In a normal society where people are not busy with self-preservation and avoiding the personal cost of their convic­tion, we should have more (people) asking.

But the Managing Director of Economic Associates,Mr. Ayo Teriba, said the mis­management of the economy under Soludo was an ‘‘open secret),adding that the former CBN boss, indeed,bungled the banking consolidation ex­ercise.

‘‘Is it not true that Soludo left a liability of N5.67 trillion which was later taken over by the Asset Management Com­pany of Nigeria(AMCON).Is he trying to say that he man­aged the economy better. No. He did not,’’ he asserted.

‘‘To me, his comments does not portend any impact on the economy or Foreign Direct In­vestment because all they are talking about, what happened in 2009, which everybody is aware of. And the results are in public domain for anyone to see. He is just being oppor­tunistic. He choose to be back­ward looking,’’he said.

On his part ,the former Governor of Ekiti State, Mr.Kayode Fayemi, said it is difficult to explain how a sustained period of oil boom should ultimately lead to aus­terity measure except to say that huge opportunities that the period of boom presented were frittered away by mind­less profligacy, wanton corrup­tion and bad economic choices made by the PDP government, which has rewarded a protract­ed period of boom with uncer­tainty and austerity and is still asking for another mandate to do more damage.

‘‘We believe that an econ­omy that is dependent on a commodity that is so danger­ously exposed to price vola­tility must always prepare for eventuality through savings and investments once the agreed thresholds are met. What we disagree with is the unilateral and arbitrary deduc­tions in accruable revenues in a way that hampers the de­velopment of the federating states,’’ he said.

Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo- Iweala, in her reaction last week, discharged all the al­legations leveled against her by the former Central Bank of Nigeria (CBN) governor, Dr. Chukwuma Soludo, say­ing he bungled the banking consolidation policy and left an incredible accumulation of liabilities that cost tax payers about N5.67 trillion to resolve.

Collapsing oil prices are dealing a crippling blow to Africa's economic giant, Nigeria, which is simultaneously absorbing a second shock: U.S. refineries once purchased as much as 40% of its production; now they're no longer buying.

Is this financial crisis injecting some sobriety into Nigeria's notoriously corrupt elites? Hardly. In the latest reports of misspent national treasure, millions of laundered dollars are apparently lubricating President Goodluck Jonathan's reelection campaign. Voting is this month.

Nigeria's in-your-face corruption was never sustainable; with Boko Haram militants razing whole villages in the north, its dire consequences are only intensified. For security reasons as well as ethical ones, the United States should stand by its anticorruption rhetoric, applying sanctions and other leverage against members of what many have called Nigeria's most kleptocratic administration ever.

At a meeting with traditional leaders last month, the governor of the southern state of Edo vented his exasperation over fishy numbers provided by the Nigerian federal government. He and other officials were told that oil revenue owed to the states was being used to bring down the price of kerosene, a basic fuel for Nigerians. “But your highnesses,” he countered, “there is nowhere in your various domains where kerosene is being sold for [only] 50 naira. So in the name of subsidy, large sums of money are being stolen.”

Such findings (and others) prompted then-Central Bank of Nigeria Gov. Lamido Sanusi to submit a memorandum to the Nigerian Senate a year ago, pinpointing gaps and illegalities in the oil accounts that left the nation with a shortfall of about $20 billion over 18 months. Spending to subsidize kerosene — for which there was no allocation in the federal budget and whose effect was not reflected in retail prices — totaled about $6 billion. When Sanusi directed his examiners to trace the money, he was suspended.

In the last two years, Jonathan has curbed the once proud central bank, appointing to its board an in-law, a close family friend and a former subordinate of the petroleum minister. A Western diplomat described that minister to me as “Jonathan's ATM.” The bank's governor, Godwin Emefiele, and a deputy governor, Adebayo Adelabu (also Jonathan appointees), previously managed banks reportedly under scrutiny by Sanusi for laundering the missing oil money.

In the meantime, a source “close to” a Nigerian bank told local news media that his establishment transferred more than $56 million to Jonathan loyalists “outside due process,” primarily to rent campaign supporters. “Some people who were hired to come to the rallies are complaining that they did not receive the money promised them. The politicians want to pocket all” of it, he said.

In another deal, the nation's equivalent of the U.S. Bureau of Engraving and Printing took out a $21-million loan at a staggering 22% interest rate to buy equipment supposedly to print ballots for next month's election. Emefiele is also chairman of the bureau, and the loan came from the bank he used to run. The bureau did not have the contract to print the ballots. An Emefiele spokesman has denied any hanky-panky.

According to numerous civil servants I've interviewed, public procurement invoices are often grossly inflated. “When it comes to a job that attracts money,” a defense ministry IT worker told me last year, “only the director and the deputy director have knowledge of the real terms of the deal.... If it's 10 million, the director says, ‘Make it 12 million.” Procurement will say, ‘Make it 15 million.' And the permanent secretary says, ‘Make it 25.'”

Given the nation's plunging revenue, such tales of corruption are shocking. Every Nigerian is hurt by the lack of investment in schools, healthcare, agriculture and basic infrastructure, not to mention bullets for the military — and by the corrosive culture fostered by high-level larceny. From the police to the registrar of public deeds to the nursery school teacher, too many government officials encountered by Nigerians demand to be “settled” with a payoff.

Many see in such practices the genesis of the biggest threat to Nigeria's security: Boko Haram. “Boko Haram initially had the principle of kicking back against the corruption of the state,” says Kemi Okenyodo, director of an organization that advocates for justice-sector reform. Indeed, at first, Boko Haram went after the police — notorious for abuse — and other government offices. Only recently have attacks on civilians been predominant.

For Muhammed Tabiu, former bar association chairman in the city of Kano, radicalization in the Muslim north is driven in part by “a search for a solution to corruption; you can't get a fair deal. You have to bribe.” First, Tabiu says, came a push for sharia law. But when that failed to deliver change, some sought more radical solutions.

U.S. officials have begun speaking out about the threat posed by corruption. But actions have lagged behind words. The intelligence community does not systematically analyze corruption. The Foreign Service Institute, which trains U.S. diplomats, has no mandatory course on it. And sanctions are typically imposed only on countries that are already pariahs, such as Russia or North Korea.

Regarding Nigeria, Washington continues to pledge counter-terrorism support, without a public word to Jonathan about the missing billions, even though the collapse of U.S. demand for oil puts American officials in a good position to exert leverage. Jonathan's finance minister gets a regular Washington platform to paint rosy pictures of her country's economy. The oil minister has not been sanctioned despite those gaps in the revenue she is supposed to be depositing in government coffers. And dodgy Nigerian banks retain correspondent relationships with U.S. counterparts.

It's up to Nigerians to decide this month what kind of leadership they want for their country. But if American officials truly mean to address the root causes of terrorism — as both President Obama and Secretary of State John F. Kerry have proclaimed — a good place to start would be with corruption.

Sarah Chayes, a senior associate at the Carnegie Endowment and a contributing writer to Opinion, is the author of "Thieves of State: Why Corruption Threatens Global Security."


Tumbling oil prices and political chaos have eroded Nigeria's lure for foreign investors, but they are likely to venture back if authorities will allow what some say is a much-needed currency devaluation.

The price of oil, the source of 70 per cent of Nigeria’s revenue has fallen 60 per cent since last June, pushing stocks down by a third over the same period. Local bond yields are two percentage points higher.

Adding to the pressure are almost daily attacks by the Islamist militants Boko Haram and political uncertainty as the country faces a closely fought presidential election on February 14.

According to Reuters, the naira's 20 per cent depreciation in the past year has further eroded the dollar value of foreign funds' holdings.

But the depreciation has not gone far enough, investors said. Some reckon the currency must fall another 10 to 15 per cent to reach fair value.

A Portfolio Manager at Bellevue Fund's pan-African equities fund with $110 million under management, MalekBou-Diab for instance, wants to see a devaluation of at least 10 percent before considering adding to his Nigeria holdings.

Foreign investors such as Bou-Diab pulled almost $1 billion out of Nigerian equities in the first 11 months of 2014, stock market data showed.

Along with the index's 32 percent fall in the past year, that has made share valuations cheap, but he is not tempted yet.

"For the short term, I understand the argument of low valuation. Yes, it is more attractive than it was -- but does it really price in the risk?," Bou-Diab said.

Investors believe that despite its decline, the naira remains expensive after more than a decade of booming oil prices.

Its real effective exchange rate (REER), a measure used to determine whether an exchange rate is overvalued or undervalued indicated the naira was 27.5 per cent above its 10-year average by mid-December, according to Reuters. For an economy that relies on oil exports, an expensive currency is a drag. But because Nigeria imports almost 80 per cent of what it consumes, authorities are reluctant to allow the currency to depreciate faster for fear of inflation before elections.

So the central bank's repeated currency market interventions costing almost a fifth of its reserves in the past year have kept the naira from reaching realistic levels.

The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele has ruled out allowing the currency to float freely, because "it will lead to high prices ... the purchasing power of our people will decline."

Markets are jockeying for a post-election naira devaluation of seven to 15 per cent.

Non-deliverable forwards price it some 30 percent weaker over the coming year. The steepest losses are likely in the next three to six months, just after the election, forwards shows.

"Holding anything in naira is now structurally much more high-risk than it was before," said Sub-Saharan Africa economist at Bank of America Merrill Lynch, OyinAnubi said.

"Our clients who invest in local debt and equity markets are much more reticent now," she said. "They feel like the central bank actions have become increasingly hard to predict."

Central bank tactics to defend the naira have included squeezing liquidity.
That had prompted JPMorgan to warn Nigeria could be ejected from its GBI-EM emerging-currency bond index -- a benchmark for $216 billion of investor money. After joining the index in 2013, Nigeria saw the amount of debt held by offshore investors quadruple.

Being pushed out could force funds to sell their holdings or avoid Nigerian debt altogether, forcing an outflow of equal size.

"If they allow the devaluation to happen, they will get liquidity back in the spot market," Portfolio Manager for Investec's African Fixed Income Fund, Antoon de Klerk said.

"It is very likely for them to stay in the index, and that is important to them, not just for a financial perspective, but also for a reputational perspective."

Official data showed Nigeria had just below $70 billion in debt outstanding by end-September. Almost 97 percent was denominated in naira.

"As long as you are FX hedged, the bond yields themselves are quite attractive, but the challenge is if you try and hedge your currency risk today. It is really expensive," said de Klerk, who hedged his local debt position some time ago.
The crux of the matter is that investors are reluctant to forsake Nigeria entirely, pointing to the opportunities provided by a large population and the infrastructure it needs. And despite its troubles the economy is expected to grow 5 per cent or so this year. Bou-Diab, for instance, sees opportunities in stocks exposed to infrastructure, both on the banking and the industrial side.

"The challenge of Nigeria is really the infrastructure -- you need electricity, you need those roads," he said.

A devaluation may be negative for banks but their share and bond prices are already factoring in most of the downside, say investors.

For debt investors, local currency bonds would be the best point of entry once a devaluation occurs, said Kevin Daly of Aberdeen Asset Management's emerging market fixed income team, who sold all his holdings in Nigerian naira and dollar bonds last autumn.

"If I saw a big move in rates, and a big adjustment in FX adjustments, Nigeria could be a very interesting investment opportunity, but we are not there yet," he said.

Nigeria's foreign exchange reserves fell to $34.38 billion as at January 28, down 20.3 percent from $43.16 billion a year earlier, owing to drawdowns by the central bank to defend the naira.

Oil & Gas Industry / PENGASSAN warns against indiscriminate sack
« on: January 29, 2015, 02:37:23 PM »
Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has said it would not tolerate indiscriminate sack of its members under the guise of falling oil prices in the international market.

Its President, Comrade Olabode Johnson, who spoke with journalists in Lagos, said the union would jealously guide the rights of workers in the sector in the face of the current realities.

He said the union is optimistic that when the Petroleum Industry Bill (PIB) is passed into law, it would launch Nigeria into global reckoning in terms of better prospects in the oil and gas industry. He stressed that the bill could still be passed barring post-election skirmishes in the country which could frustrate same.

Director, Advisory, Oil and Gas, PriceWater House Ltd. Mr Ritch Wingo, said oil companies may lay off workers due to the drop in oil price in the global market.
Wingo, who spoke on the sidelines of the Offshore West Africa Conference in Lagos, said  falling oil price has adversely affected the sector.

“Right now, a lot of companies are trying to lay off workers due to falling oil price. It is going to be pretty rough in a couple of months to come. The best thing to do now is to go back to the banks to talk on how to restructure our finances so that people will not default. If oil price continues to fall, investors are not going to invest again,” he said.

Wingo said the present pump price of petrol, though good, was not sufficient.
“If you look at the United States of America, a gallon of petrol is sold for just $4 (N740) because there is a regulatory body regulating the price,” he said.

News & Happenings / Fall In Naira: Impact On The Economy
« on: January 28, 2015, 09:41:07 AM »
Following the drop in the international price of oil, the mainstay of the nation’s economy, the federal government responded with a complement of measures that included the devaluation of the currency (the naira) officially by eight per cent. With a further drop in the price of oil, fears are rife in several quarters that the government may succumb to pressure from declining foreign exchange and devalue the naira further still. Oil provides Nigeria with over 90 per cent of its foreign exchange and the global oil market crisis has robbed the nation of over 30 per cent of its foreign exchange, as well as national revenue.

However, at a meeting of the Central Bank of Nigeria (CBN) last week, such fears were perceptibly laid to rest. According to its governor, Mr Godwin Emefiele, the government is resolved to protect the nation’s currency from further fall in value. It also warned speculators in foreign exchange that actions that will negate the effects of the policy initiative will be frustrated. But the warning, it appears, doesn’t hold water, as the naira exchanged at N210 to the US dollar yesterday.

The stand of the government remains welcome, against its earlier seeming unpreparedness in the face of the free fall of the price of oil. The development qualifies as perhaps the first sure-footed, positive step taken by the administration since oil prices dropped by over 50 per cent within only six months of June to December in 2014. Devaluation is not intrinsically a negative development, if it serves as a deliberate policy measure by government to address a specific economic situation. The policy of devaluation is beneficial, if the economy has provision for adequate domestic productive capacity that can take advantage of the opportunities offered by the increase in the prices of imports.

However, while the government’s policy may be valid, its implementation remains another issue. Effective policy implementation is neither an automatic nor an autonomous dispensation. Given the vulnerability of policies in Nigeria to several systemic maladies such as corruption and incapacity, to name a few, the fear is real that implementation may be compromised.

The foregoing is accentuated by the less than robust initial response of the government to the oil crisis, in spite of the elaborate early warning signals that preceded it. The failure of the managers of the nation’s economy to save it from the present dilemma, in our opinion, leaves a sour taste in the mouth. The situation is not helped by the often-misleading claims by the minister of finance and coordinating minister of the economy, Dr Ngozi Okonjo-Iweala, whose postulations are often at variance with the realities in the economy. In the face of this, we think that efforts to re-grow the economy need to be launched, with emphasis on boosting domestic production. It is time, in our view, to enthrone the local manufacturer who deploys indigenous production factors.


The significant drop in Nigeria’s revenue as a result of the slide in crude oil prices may compel the federal government to impose further restrictions on importation of certain agricultural products, a report has stated.

Specifically, some of the agricultural items, according to the report may include palm oil, nuts and rubber goods.

Guaranty Trust Bank Plc (GTBank), made the prediction in its 2015 macroeconomic outlook obtained by THISDAY.

Oil revenue currently accounts for more than 75 per cent of government’s revenue and close to 90 per cent of foreign exchange income.

Given that weak oil prices are expected to prevail till mid-2015, the financial institution said it expects forex supply to suffer a significant decline.

In the first two quarters of 2014, Nigeria recorded year-on-year gross domestic product (GDP) rates above six per cent in the midst of declining worldwide growth trends.

This trend continued in the third quarter as Nigeria recorded year-on-year GDP growth of 6.23 per cent driven by non-oil sector which grew by 7.5 per cent.

“In spite of government’s efforts to diversify the economy and to reduce demand for forex, we do not see this taking effect in the short-term. We are however, confident in the central bank’s ability to hold the current official exchange rate steady, for oil prices above $55 per barrel.

“In addition to previous import substitution initiatives restricting the importation of fertilisers, sugar, cement and other items, the federal government in 2014 placed restriction on the importation of certain classes of vehicles and automobiles spare parts through increased tariffs and levies.

“The federal government expects that the policy would create jobs, reduce the dependence on imported vehicles, thereby reducing the demand for forex for the purpose of vehicle ownership. Faced with dwindling oil revenue, we expect the federal government to ramp up efforts in this regard,” it argued.

The report noted that in 2014, offsetting what would have been otherwise been a stable pre-election year, declining oil prices had set the tone for tighter monetary policies, market turbulence and inevitable devaluation of the naira in the fourth quarter.

Furthermore, it stated that the combined effect of declining oil prices, gradual capital flight, a reduction in forex supply and the import dependent nature of the Nigerian economy resulted in sustained pressure on the naira.

“Given the international variables contributing to the weakened state of oil prices and OPEC’s  intent to maintain current supply, even if prices go to as low as $20 per barrel, we do not expect a reversal in the direction of oil prices in the first half of 2015.

“However, we expect that this may change later in the year as declines in supply are expected in the second half of 2015,” it added.

The 24-inch section of the Trans Forcados pipeline in Nigeria's Niger Delta that was shut down a week ago after oil thieves punctured it, has been reopened, state-owned Nigerian National Petroleum Corp said Tuesday.

"Repairs to the vandalized section of the Trans Forcados pipeline were completed last Saturday and it has been reopened," NNPC spokesman Ohi Alegbe told Platts.

"Normal delivery of crude oil and gas has resumed," Alegbe said.

The facilities, which was hacked into by thieves on January 24, is used by the Nigerian Petroleum Development Company, the upstream arm of the NNPC, to transport around 11,000 b/d of crude and 6.5 MMcf/d of gas.

Nigerian independent producer Seplat Petroleum also used the line to transport its over 60,000 b/d of oil output.

The bigger, 28-inch and 48-inch sections of the pipeline are operated by Shell.

The closure of the pipeline, not only disrupted NPDC crude oil production, but also cut gas supply to power plants in the Niger Delta.

The Trans Forcados pipeline has been frequently targeted by oil thieves.

The Nigerian economy has be strained due to large-scale theft of its crude and lately lower oil prices, while foreign oil companies have also been disposing their assets in the Niger Delta because of oil theft and pipeline sabotage.

Oil & Gas Industry / Nigeria can’t depend on oil alone –Amosun
« on: January 26, 2015, 01:11:31 PM »
Governor Ibikunle Amosun of Ogun State has demanded diversification of the Nigerian economy away from oil to agriculture and tourism in view of the continuing fall in the price of crude oil in the international market.

Amosun, however, restated his administration’s commitments to developing agriculture, commerce as well as tourism potentials of Ipokia Local Government Area to shore up the state’s revenue base.

The governor gave the assurance in an interview with journalists shortly after addressing supporters of the All Progressives Congress, APC, who trooped out to receive him during his re-election campaign tour of Maun in Ipokia Local Government Area of the state.

On oil exploration project in Tongeji Island in the council area, Amosun said due to dwindling proceeds from oil at the international market, Nigeria cannot continue to depend on oil and needs to diversify to agriculture and tourism to grow her economy.

Noting that the continuous fall of crude price has direct negative impact on federal revenue accruing to states, Amosun stated that it was high time states, particularly Ogun, improved their revenue base by turning to agriculture, tourism and commerce potentials.

He recalled that Nigeria survived mainly on proceeds from agriculture before the advent of crude oil, adding, “We must go back to that era to rebuild our economy.”

The governor identified with agriculture, commerce and tourism potentials, which he said abound in Ipokia council, and assured that his administration would accord it the priority it deserved.

He also vowed not to renege on his efforts towards ensuring that oil exploration on Tongeji Island takes off, but warned that agriculture remains Nigeria’s best option to survive.

Responding to demands of the people of Maun, who wanted secondary school and electrification of the community, Amosun explained that though it was the responsibility of the Federal Government, he would ensure his administration addresses their demands.

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