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News & Happenings / Ghana to reduce the extent of gas import from Nigeria
« on: October 28, 2014, 08:28:00 AM »

Ghana has announced plans to significantly reduce the quantity of gas it purchases from Nigeria in the next couple of months through increased local gas production.

President of Ghana, Mr. John Mahama, who was responding to questions on the economy at the Global African Investment Summit in London, said the country is working hard to court more private investors to shore up local production of gas to solve the country’s power crisis.

He said this will end the country’s over-reliance on the West African gas pipeline which has been inconsistent with supplying gas to the country.

He said, “We had a lot of excitement when the gas pipeline was built hoping that the abundance of Nigerian gas will flow through the pipeline to help all the four countries signed onto the pipeline, but the volume has been very disappointing.”

He, however, expressed the hope that the country’s current energy crisis will stabilise when works on the Atuabo gas processing plant is completed, adding that the plant should start producing gas for power generation by the end of November.

Mahama said the facility, which has the capacity to generate about 140 million standard cubic feet of natural gas a day, is estimated to save the country more than $500 million annually when it is substituted for light crude oil in the generation of power.

In addition, he stated that the facility will produce more than 70 per cent of the estimated 240,000 tonnes of liquefied petroleum gas (LPG) required annually for domestic use in the country.

A Ghanaian news website, Ghanaweb, said at least three power plants in the country were taken offline in September, after Nigeria stopped supplying gas to Ghana over a strike by oil workers.

The news website said this has been a regular tale which plunges the country into black-outs almost instantly.

According to the news website, the Electricity Corporation of Ghana (ECG) had a couple of days ago, announced a 48-hour-on; 24-hour-off load shedding regime after it was forced to shed over 500 megawatts of power.

It said, “That led to an emergency meeting by stakeholders with a plan to purchase crude oil at a cost of $120 million to power the thermal plants.

“The ongoing load shedding programme across the country may soon improve considerably following measures taken by power producers to increase generation capacity. The Bui Dam is now operating at full capacity following a slight improvement in the water level.”

- See more at:


The impact of the falling oil prices may not be felt much on the Nigeria economy, if the government imbibed saving culture, said Mr. Bekuochi Nwawudu, the Director of CBO Capital, a Lagos-based investment advisory and project development.

Nwawudu, while reacting to worries being expressed by some Nigerians about the continued downward trend of global oil price, told Vanguard that Nigeria should save more now for the rainy days.

“We should save more now. The federal government should save more with the Nigerian Sovereign Investment Authority, NSIA, while at the state government level, there should be matching funds as well as tax breaks,” he said.

This came as the Managing Director of Seplat Petroleum Development Company, Mr. Austin Avuru, said there is no need to panic as oil prices will still go up, “but when? I do not know.” Geographies are shifting, but the energy mix as well as the demand and supply equilibrium has not changed much,” he said.

Avuru explained that technology has made it possible to discover more oil in the world to satisfy the global growing demand. According to him, ‘thanks to technology and pricing; there is still enough oil and gas to satisfy the growing demand through 2040. Wind and renewables have failed to be the solution.”

However, Nwawudu cautioned that given the country’s dependence on oil, the fall in prices will affect the foreign exchange and interest rates. ‘’Given oil’s current share, a significant fall in the price will have an immediate impact. This would be felt through foreign exchange rates and interest rates, then falling budgets and government spending,’’ he said.

Speaking on the impact of the price fall on the budget which benchmark is $78, he noted that although the price is still above the benchmark it is not going to harm funding; only that less ‘excess’ will go into the excess crude account or the NSIA.

He argued that the market view is that the price fall is likely to be short-lived, “so possibly, no cause for alarm.”

“There could be risks to the budget, but at this level, it is more likely that increased borrowing could fill the gap; we have low debt to GDP ratios. We also have solid reserves and these can be used to defend the currency in the near term.

“The question for us though is – why are we worrying? Why is the whole country watching the oil price? Is this how we should be thinking in 2014 and what Nigerian livelihoods and welfare should be exposed to? Is the hedging model (known/fixed/international credit risk) vs. the self-insurance (exposed/local credit risk) model best suited to Nigeria?

“If we hedged or forward sold a portion of our production say 50 percent for 10 years, then we would simply know that for X period Y price and Z revenue is coming in and get on with it.

That the price has gone up or down is an issue for future years and something we can prepare for,” he said.

For government to cushion the effect of the falling oil prices, Nwawudu suggested borrowing to maintain the budget in the short term, while adjustments should be made in the long term.

- See more at:


The Managing Director and Chief Executive Officer of Nigeria Liquefied Natural Gas (NLNG) Limited, Mr. Babs Omotowa has stated that the federal government and the company’s shareholders are losing $2.5 billion revenues and 18,000 jobs to the delay in the implementation of the Train 7 of the company.

Speaking recently at the 46th annual conference of the Chartered Institute of Personnel Management (CIPM) in Abuja, Omotowa said Train 7 would allow the NLNG to add eight million metric tonnes or 40 per cent to the current production capacity.

He said the project would also enable the company attract over $12 billion investments, create over 18,000 construction jobs and yield additional $2.5 billion revenues.

“The reality is that having come to the end of our tax holiday period, about 70 per cent of value generated in NLNG today goes to the Government and people of Nigeria. So, a Train 7 is a big value to Nigeria and together with shareholders we are continuing to work on this,” he said.

Omotowa said with the changing business environment, NLNG would also be making changes to its culture, adding that they have embarked on a culture alignment journey to drive even more organisational efficiency and continuous improvement.

“We will for example be developing more leadership capabilities for us to have more true leaders not by authority but by role modelling. We will be moving into a more integrated company, increased empowerment, open communication, coaching and development,” he added.

He said the company had also grown from a $4 billion dollar per annum company to one of over $10 billion company in fifteen years, favourably comparing with the turnover of many companies in the 2013 FSTE 100 list.

The NLNG boss stated that an investment of $7.5 billion dollar has now yielded revenue of $85 billion to date and hours of work without any lost time injuries.

According to him, the company now has a$13 billion asset base, emerging as the 4th largest LNG plant in the world.

In addition, he said the company was the single largest ship owner in Nigeria with 24 LNG carrier ships.

He further stated that NLNG’s business has strong impact on key macroeconomic variables, adding that NLNG’s contribution to the Gross Domestic Product (GDP) has consistently increased to four per cent in 2008.

The company, according to him currently supply over 80 per cent of cooking gas (LPG) in Nigeria after a recent increase in its dedicated volumes by 67 per cent, adding also that the company is prepared to increase it by 1000 per cent to get more Nigerians to switch to cooking gas rather than continue to use fire wood and Kerosene, alternatives that have environmental and health disadvantages.

“We are also a good tenant at Bonny, an Island with a population of 250,000. It is one of the few towns in Nigeria that enjoys 24 hours electricity supply, pipe borne water, roads, hospitals, vocation centres, just to mention a few. An integrated partnership approach has enabled uninterrupted operations over the years,” he added.

In the area of Nigerian Content, Omotowa also described his company as are a leader with its recent contract with Samsung and Hyundai in South Korea to build 6 new ships.

“We used that opportunity to have 600 Nigerians trained in ship building with 200 of them in South Korea. We also have been able to ensure Nigeria goods and services will be used in the construction work by working with local contractors. Kabelmetal has for example being able to achieve historic exports of $1m cables exported to South Korea and more cables, paints, furniture, etc will follow soon from other companies,” he explained.

News & Happenings / Nigeria at risk over falling oil price—FG
« on: October 27, 2014, 11:08:27 AM »

The Federal Government, yesterday, raised an alarm over the decline in the global crude oil prices, saying that it is already putting in place stricter measures to cushion the effect of the drop on the Nigerian economy.

“Nigeria has two to three months of rainy day savings to cushion it while contingencies are put in place should world oil prices continue to fall,” Ngozi Okonjo-Iweala, Co-ordinating Minister for Economy told the Financial Times.

Okonjo-Iweala disclosed that should oil price dip below $78, the country would have to draw down on the Excess Crude Account (ECA).

She said, “Our intention is not to run in there and raid it, but even if prices continue to go down we can survive sufficiently for two to three months. That is the time needed to get other measures in place. What you don’t want is a hard landing.”

“Our buffers are slimmer this time,” Okonjo-Iweala acknowledged, adding that there is about $4bn in the ECA at present, $2bn short of what the International Monetary Fund had recommended.

She further stated that the country needs to ramp up our non oil revenues on the fiscal side, adding that global consulting firm, McKinsey, has been engaged to carry out an extensive review of revenue services in order to identify potential gains.

Okonjo-Iweala added that she was encouraged by an exhaustive data review, which saw Nigeria’s economy overtake South Africa’s as the continent’s largest, showing that the economy had diversified to a much greater extent than previously thought.

She said, “In an oil country you can never feel at ease exactly. But I feel we can master this situation because we have a diverse base.

“We will have to look very hard at recurrent expenditure, and identify overlapping agencies. When the price is heading down everyone sees the necessity but that doesn’t stop them hating you.

Okonjo-Iweala agreed, however, that lower oil prices would provide a stronger incentive to government to rein in oil theft, which has cost billions of dollars a year, and help to drive through stalled oil sector legislation to stimulate production.

“That would enable us to pick up quantity to help us cushion on the price side,” she said.

The Federal Government, which depends on oil typically for about 80 per cent of revenues, is assuming an oil price of $78 per barrel for its 2015 budget, up from $77.5 per barrel in 2013 and precariously close to recent world prices.

Nigeria was in a much stronger position last time the world price of oil tumbled, with about $22bn squirrelled away in the ECA. Those funds helped the country weather the 2008 global financial crisis with economic output relatively unscathed.

But during recent boom years the government has persistently used the ECA, dividing out the proceeds among the 36 states in the federation, which are constitutionally entitled to their share.

Nigeria also holds foreign reserves equivalent to $39″billion. These have come under recent pressure as the central bank has stepped in to prop up the naira, but still cover nine months worth of imports.

Nigeria’s ratio of non-oil tax revenues to GDP, at 4.5 per cent, is among the lowest on the continent. McKinsey helped South Africa broaden its tax base to the tune of about $3bn and Okonjo-Iweala believed similar gains were possible over the longer term in Nigeria.

- See more at:

To stop the fortunes of the country dwindling any further as a result of the falling price of oil and reduced crude oil output, a clergyman, Matthew Kolawole Olakanmi, has called for the diversification of the nation's economy from oil to agriculture.

Olakanmi, founder and the leader of the Celestial Church of Christ (CCC), Onala Parish, lamented that over-reliance on oil since its discovery in the 1960s had started to take its toll on the nation's economy.

Olakanmi spoke with journalists after the International Christian Leadership Promotion at the church auditorium, along Mokola-Sango road, Oremeji, Ibadan, presented him with a Leadership Merit Award.

He insisted that the only way for the Nigerian government to salvage the country's economy from further going down "is to take the bull by the horns and squarely face agriculture, which is more reliable and sustainable".

Olakanmi said that, "Apart from stabilising our economy, diversification of economy from oil to agriculture will provide jobs for our teeming unemployed youths.

"We are only talking about fall or reduction in oil price in the world market as it affects Nigeria.

"We must note that God may allow such a thing to happen because of our sins. I read a newspaper, which stated that Boko Haram insurgents had killed over 28,000 innocent Nigerians including pastors and Muslims, and you think God will just be watching?

"We need to pray and beg God to forgive us our sins, that is the only way forward. Our leaders have taken things for granted for too long; they should use the drop in the oil price now to apply the brakes and reassess our economic position before it gets too late," he said.

News & Happenings / Dasuki promises to protect NNPC’s oil pipelines
« on: October 27, 2014, 11:05:58 AM »

The National Security Adviser, NSA, Col. Sambo Dasuki, has promised to provide adequate security to protect crude oil and product pipelines across the country.

Dasuki made the pledge during a courtesy visit on him by the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Dr. Joseph Dawha in Abuja.

He further pledged the readiness of his office and all the security agencies to continue to play the pivotal role of securing the nation’s crude and product pipelines in the best interest of the nation.

Dr. Dawha during the visit sought for the collaboration of the NSA to protect the facilities, adding, the partnership is geared towards the economic well-being of the nation.

According to Dr. Dawha, the high incidence of pipeline vandalism, crude oil and product theft, illegal refineries and security of the Corporation’s personnel are major challenges that require continuous collaboration, engagement and partnership.

He maintained that the Federal Government Security and Intelligence Agencies have remained invaluable partners in their support for the Oil and Gas Industry by fostering secured business environment.

Dr. Dawha stated that the sustained collaboration with the security agencies is imperative to the socio-economic growth, peace and stability of the country.

See more at:

The Nigerian Navy, yesterday, handed over 66,000 litres of crude oil it recovered from suspected pipeline vandals to officials of the Nigerian National Petroleum Company, NNPC.

The Commander, NNS Lugard, Lokoja, Commodore Shuwa Mohammed , who handed over the vessel, commended the NNPC for the quick outcome of laboratory analysis of the stolen products.

The stolen products were transferred from the ship at the NNS Lugard Naval base in Lokoja and loaded in two trucks.

The NNPC Station Chief in Lokoja, Mr. Idoko Ameh, who was on ground to accept the stolen product, thanked the Navy for collaborating in the fight against vandalism and oil theft.

See more at:

News & Happenings / Gunmen kidnap oil minister, Diezani’s sister
« on: October 25, 2014, 12:36:58 PM »

The sister of Nigeria’s powerful petroleum minister has been kidnapped in the oil hub of Port Harcourt, police said Friday, in the latest abduction targeting a prominent political family.
Osio Agama, whose sister Diezani Alison-Madueke leads Africa’s largest oil industry, was seized at gunpoint as she approached her car on Tuesday night, River state police spokesman Ahmad Muhammad said.

Muhammad said police “were not aware if any ransom demand had been made” and the motive for the abduction was unknown but the southern oil-producing Niger Delta region has seen waves of ransom kidnappings in recent years.

One of the most prominent cases came in December 2012, when Finance Minister Ngozi Okonjo-Iweala’s 82-year-old mother Kamene Okonjo was abducted from her home, also in Delta state.

Okonjo-Iweala and Alison-Madueke are widely seen as the two most powerful members of President Goodluck Jonathan’s cabinet.

Jonathan’s 70-year-old uncle was also kidnapped earlier this year in Bayelsa state, which neighbours Delta.

Some have sought to attach a political motive to attacks targeting Nigeria’s most powerful families.

The finance minister implied that her mother was seized because of her ministry’s crackdown on oil companies which had abused the country’s rotten fuel subsidy scheme.

But such links were never proven and Kamene Okonjo was released a week after her abduction.

The security forces and affected families almost never confirm ransom payments but most believe kidnappers in the Niger Delta are seeking financial gain.

Despite producing roughly two million barrels of oil per day, the area remains acutely poor with high unemployment.

Gang activity is rampant and kidnappings have at times been perpetrated on a near weekly basis.

Local politicians, prominent businessmen and foreigners have been among the targets.

- See more at:

News & Happenings / Oando oil production hits 50,000 bpd
« on: October 22, 2014, 01:29:26 PM »
Federal Government’s quest for strong indigenous participation in the nation’s oil and gas sector has received a boost as Oando Energy Resources, OER, production capacity has reached 50,000 barrels per day, bpd.

The development follows Oando’s completion of the acquisition of the Nigerian upstream oil and gas business of ConocoPhillips at the sum of $1.5 billion.

The Chief Executive Officer of OER, Mr. Pade Durotoye, who announced the new achievement, said the acquisition shows the company’s new growth strategy.

“The acquisition speaks of our inorganic growth strategy of acquiring choice assets with good production rates, a large 2P reserve base and 2C resource potential, for future development.

“Oando Energy Resources as a consolidated entity now has working interests and investments in 16 licenses and produces circa ~ 45,000 – 50,000 boepd, with 2P reserves of 230mmboe and 2C resources of 536.8mmboe. Our team is well positioned to develop these assets and unlock value for our shareholders,” he said.

According to him, the transaction was made possible due to the support from the shareholders, the Federal Government of Nigeria, NNPC and the international and local financial institutions that assisted with the necessary debt funding.

“We are committed to playing our role as a leader in this industry and look forward to transactions of this nature that promote Nigerian grown companies to prominent position,” he said.

The acquisition means that OER will now take over the onshore business of Phillips Oil Company Limited (POCNL), which holds a 20 percent non-operating interest on oil mining leases, OMLs, 60, 61, 62 and 63, as well as related infrastructure and facilities in the Nigerian Agip Oil Company Limited, (NAOC) joint venture. The other stakeholders are Nigerian National Petroleum Corporation with a 50 percent interest and NAOC (20 percent and operator)

In the offshore, OER has now taken over Conoco Exploration and Production Nigeria Limited (CEPNL), which holds a 95 percent operating interest in OML 131 located 70 kilometre offshore in water depths of 500 metres to 1,200 metres.

It has also acquired Phillips Deepwater Exploration Nigeria Limited (PDENL), which holds a 20 percent non-operating interest in oil prospecting license, OPL, 214, located 110 km offshore in water depths of 800m to 1,800m. The other stakeholders are ExxonMobil (20 percent and operator), Chevron (20 percent), Svenska (20 percent), NNPC (15 percent) and Sasol (5 percent).

In June 2014, the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, approved the conversion of OPL 214 to oil mining lease, OML 145 for an initial period of 20 years.

The total reserves and resources associated with the transaction are proved plus probable reserves of 211.6 million barrels of oil equivalent, best estimate contingent resources of 498.6 MBOE and unrisked best prospective resources of 656.9 MBOE.

With the transaction, Oando has acquired the 20 percent working interest of NAOC JV, which includes 40 discovered oil and gas fields, of which 24 are currently producing, 40 identified prospects and leads, 12 production stations, 1,490 kilometre of pipelines, three gas processing plants, Brass River Oil Terminal, Kwale-Okpai 480 MW combined cycle gas-fired power plant (Kwale-Okpai IPP) and associated infrastructure.

“This transaction represents a transformational leap forward for our company and is in keeping with our overall strategy to grow our portfolio of Nigerian-based assets by focusing on those opportunities that deliver high quality growth in reserves and production.

“Our management team is familiar with these assets and possess the managerial experience and technical expertise necessary to unlock their value for our shareholders,” said Durotoye.

News & Happenings / Doubts over Angola snatching Africa’s top oil spot
« on: October 22, 2014, 11:47:46 AM »

Insiders from Angola's burgeoning oil industry have reacted sceptically to predictions that the rapidly growing nation may be about to overtake Nigeria as Africa's largest oil producer.

The International Energy Agency has predicted that from 2016 to around 2020 Angola will pump more crude onto the world market than its rival, thanks in part to Nigerian oil being syphoned onto the black market.

"If it happens it will mainly be because of instability in Nigeria, both politically and because of the theft of oil," said Jose de Oliveira, a Luanda-based industry expert.

"And if it does happen it can't last a long time. Nigerian reserve capacity is larger than Angola's."

Nigerian production hit a peak of 2.44 million barrels a day in 2005, but has wavered since.

Angola currently produces about 1.71 million barrels a day, but industry sources worry about disruptions there too.

"The interesting thing is that the IEA's forecast put Angola in first place without really being precise about what Angolan production would be," said an industry source, who asked not to be named.

"That means it is unlikely that Angola will pass the symbolic two-million-barrels-a-day mark," said the source.

Technical problems, infrastructure bottlenecks and state intervention have all hampered production and stalled the achievement of that goal.

News & Happenings / Crude Oil Theft Now 800,000 Barrels Monthly - Navy
« on: October 22, 2014, 11:35:49 AM »

The Flag Officer Commanding (FOC) Eastern Naval Command, Rear Admiral Charles Obiora-Medani, has disclosed that Nigeria now loses 800,000 barrels of crude oil monthly to thieves as against over two million barrels monthly at the early part of this year.

Obiora-Medani made the disclosure in Calabar yesterday during the second FOC bi-annual inspection tour of Naval formations under the command.

The FOC said: “In January 2014, when the present Chief of Naval Staff, Vice Admiral Usman Jibrin, took over, Nigeria was losing 2.6million barrels per month as at January figure.

“As at September 2014 which is the last published figure, it has dropped to 800,000 barrels, that will tell you that they have being a major drop in oil theft.”

He also stated that the rate of criminal activities perpetrated by sea pirates along the water ways in Cross River and Akwa Ibom States have reduced drastically.

The FOC said the drastic reduction in oil theft and other criminal acts within the waterways stems from steady and effective patrol of navy personnel along the Calabar-Oron and Ikang water ways.

“Our effective patrol has made it impossible for sea robbers to attack oil service vessels and international boats that apply between Nigeria, Sao Tome, Cameroun and Gabon; because of our effective patrol along this axis, they can’t get around them, so they have now resorted to attacking soft target which are passenger boats.

“I am assuring you that very soon, we will eradicate these criminals from our water ways,” Obiora-Medani said.

He said the rate of attack on passenger boats by pirates was on the decrease because the criminals have been having very though time with the navy. The FOC said the Nigerian Navy was doing a great job in tackling oil theft and sea piracy in the country.

He said the navy would not relent in its effort in ensuring that the water ways are free from criminals and pirates.

Obiora-Medani applauded the federal government and Cross River State Government for what he described as their intervention towards controlling the erosion site that was posing a threat to the commands facilities.

Facilities inspected by the FOC included the Navy Fleet Support Ships (NFSS), Nigerian Navy Ship (NNS) Victory, Navy Secondary  and Primary Schools, Navy reference hospital and a host of others.

News & Happenings / Shell strikes sales deals for Nigerian assets
« on: October 22, 2014, 11:33:48 AM »

Royal Dutch Shell has signed sales agreements for all the Nigerian oil assets it put up for sale following a 2013 review of its business in the West African country, a spokesman said on Tuesday.

The Anglo-Dutch oil major, like many of its peers, is carrying out a major cost-cutting drive. It has opted to move away from Nigerian onshore oil production, which is plagued by massive oil theft, security problems and oil spills and is also becoming a major source of legal liabilities.

The assets include Shell's 30 percent stake in oil mining leases (OML) 18, 24, 25, 29 and the Nembe Creek Trunk Line (NCTL), the country's main onshore pipeline.

The company also said that, together with its partners Total and Eni, it had signed an agreement to sell their 45 percent stake in OML 18 to a consortium led by Canadian oil and gas company Mart Resources. The remaining share of the oil field is owned by Nigeria's national oil company.

Mart confirmed it had entered into an agreement for the acquisition of OML 18, whose production it said ranged between 20,000 to 30,000 barrels per day from around 30 wells.

The value of the deals was not disclosed. In August, the Financial Times reported that Shell was close to selling the oilfields for about $5 billion to domestic buyers.

The sale process "has not yet fully concluded but we can confirm that we have now signed sales and purchase Agreements for these Oil Mining Leases and the NCTL", a Shell spokesman said.

"Nigeria remains an important part of Shell's portfolio, where we will continue to have a significant onshore presence in oil and gas, and which has clear growth potential, particularly in deep-water and onshore gas," he added.

In March, Reuters reported that Nigerian firms Taleveras and Aiteo had made the highest bid of $2.85 billion for OML 29, the biggest of the four oil fields. A senior Nigerian oil executive said a consortium headed by Pan Ocean Oil Corporation had bid for OML 24 at a price of about $1 billion.

Shell's shares were up 3.073 percent at 2,613.5 pence at the close of London trading. (Reporting by Ron Bousso; Editing by Pravin Char)


The declining crude oil prices, which have continued to cause apprehension across the global market may put pressure on the ability of the Central Bank of Nigeria (CBN) to intervene in the forex market.

The global crude oil prices, which was relatively stable for nearly four years has been on a decline in the past few weeks and this may hurt the country’s external reserves  and revenue.

A Lagos-based investment company, WSTC Financial Services Limited, in its latest economic report obtained on Monday, pointed out: “Falling crude prices constrain CBN intervention. In order to stem leakages and to minimise exchange rate volatility, the CBN authorised a mandatory recapitalisation of firms operating in the bureau de change (BDC) segment of the forex market with an upward review of the minimum capital requirement for operation in the segment from N10 million to N35 million and also with the cautionary deposit of N3 million reviewed to N35 million.

“This has subsequently contributed to the narrow spread between exchange rates in the bureau de change market and other segments of the Nigerian forex market.”

However, WSTC anticipated that the continuous intervention by the CBN would be constrained by the slowdown in the rate of accretion to the nation’s foreign reserves.

The anticipated slowdown foreign reserves accretion was based on its outlook of weak oil earnings resulting from falling crude oil prices and sub-optimum level of domestic oil production.

The report also projected that the naira would depreciate this quarter.
It added: “Also, given the prevalence of domestic uncertainties, weak economic fundamentals and impending increase in interest rates in the US on the horizon, we do not expect the downward pressure on the naira to subside within the fourth quarter of 2014.

“Consequently, we envisage a slide in the value of the naira as we approach the 2015 general elections.”

However, it maintained that the Nigerian economy has remained resilient to tight monetary policy, despite national security challenges and sluggish global recovery.

The Nigerian economy expanded by 6.5 per cent in the second quarter 2014 on the back of solid growth in both the oil and non-oil sectors.

“While we expect domestic growth to remain robust in second half of 2014, we believe that the performance of the oil sector will be dampened by dwindling international oil prices and weaker-than-projected domestic crude production,” it added.

The equities market ended third quarter 2014 amid weak corporate performance, lingering security crisis and tighter global liquidity. Also, yields leapt northwards during the third quarter in the fixed income market on the back of rising country risk.

“Overall, we reckon that tight domestic liquidity measures, weak government earnings, rising political tensions ahead of the 2015 general elections and impending normalisation of rates in the US portend downside risks to the performance of financial markets in Q4 2014," it added.

News & Happenings / Nigeria is not broke - Okonjo-Iweala
« on: October 22, 2014, 11:23:49 AM »

The Federal Government yesterday, reassured that Nigeria is financially sound and has been meeting its local and international financial obligations despite dwindling revenues from crude oil exports. The assurance came from Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala.

The minister, who gave the assurance at a crowded press conference in Abuja, said:  “Despite the dwindling revenue of the nation due to falling crude oil prices and decrease in output, the nation is not broke, as feared in some quarters”.

There have been concerns that the consistent fall in accruals to the federation account in recent months could jeopardize implementation of the 2014 budget but, the minister said in Abuja that contingency plans were being put in place to forestall any immediate adverse effect on the budget.

“Nigeria is a country that is dependent on one commodity (oil) and that commodity is dependent on how much the buyers want to  buy. We had a yo-yo kind of expenditure pattern before 2003 but after that even when there was a fall in the price of crude from $140 to about $35 or $38 between 2003 and 2008, our economy remained stable because we had accumulated about $22 billion in the Excess Crude Account.

“It is the same thing now.  We may have to cut down on some of our expenditure. We may have to mobilize more revenue; we have to look at the fiscal policy; we have to look at the monetary policy — all of these have to come together and we are looking at them right now in the Ministry of Finance.

Oil and nation’s economy

“I want to assure Nigerians that we are putting in place contingency plans so that our economy remains stable. Right now, we  have fluctuations in the price of crude oil and when that happens, it means that the money that comes into the coffers is a little bit small. Does that mean that the country is broke? If we are not able to pay salaries to people or meet other obligations then we can say the country is broke but we have not got there. Nigeria is not broke”.

The Federation Accounts Allocation Committee, FAAC, meeting in Enugu, last week, could not share the monthly revenue due to paucity of funds, but the minister said they would reconvene today to distribute the statutory revenue accruing to each tier of government for the month’s expenditure.

According to the minister, the current realities of falling oil prices and reduction in quantity of crude oil production have made the diversification of the economy more imperative now than ever.

She added that in spite of the global economic challenges the Nigerian economy remains resilient, growing at about 6. 5 per cent, making it one of the fastest growing economies in the world.

Her team at the Ministry of Finance, she added, had been working round the clock to ensure that the real sectors of the economy, especially, agriculture and power, among others received the needed impetus to boost productivity and provide jobs.

$14.1bn foreign loan

Dr. Okonjo-Iweala revealed that a whopping $14.1 billion had been  facilitated by her ministry for various sectors’ programmes and projects at concessionary rates of sometimes as low as three per cent from the international finance market.

Some of the loans, she added have moratorium of between 5-10 years and are to be repaid in 25 years, thus making them cheaper and more attractive than borrowing from the domestic market.

She assured, however, that the administration was very mindful of the debt-overhang history of the nation and would not borrow so much as to put the nation under another debt burden, as was the case until 2005.

On the Federal Government Housing programme, the minister disclosed that successful applicants would receive letters intimating of their successful applications in 10 days and that the initiative would be a revolution in the nation’s quest for sufficient housing.

Investment plans unaffected by weak oil—SWF

Meanwhile, Nigeria’s Sovereign Wealth Fund said its investment programme over the next six months, including on infrastructure, will go ahead, even as revenues that provide its capital are hit by falling oil prices. Uche Orji, Chief Executive of the Nigeria Investment Authority, said that one of the vehicle’s core aims is to manage oil export windfalls to cushion the economy in harder times.

“The oil price has come down but frankly, let’s not forget why this fund was set up. It was to prepare us for days like this,” he told Reuters on the sidelines of an African investment conference in London yesterday.

Orji conceded that weakness in the international oil market would affect the fund but he remained focused on deploying existing assets to investment in infrastructure projects in sectors such as transport, power and healthcare.

“Obviously we get funded from the oil price so if it’s lower, it will affect us. But our plan in the next six months is to fully deploy what we’ve been given. We still haven’t fully deployed our capital yet,” he said.

Oil prices have dropped more than 25 per cent since June on strong supply, signs of weak growth in demand and indications that key oil producers, particularly Saudi Arabia, have a limited appetite to cut output to bolster prices.

Nigeria established the Sovereign Investment Authority (SIA) in 2011 with $1 billion seed capital in an effort to manage oil export revenues.

The fund is split into three components, a ‘Stabilisation Fund’ to act as a buffer against economic turbulence, an Infrastructure Fund and a Future Generations Fund.

“We still have gaps in our infrastructure fund. We’ve only made about three commitments so far; so we have quite a few more to go,” he said.

According to the fund’s website, the infrastructure vehicle accounts for up to 40 per cent of total assets with a similar amount allocated to the portion managed for future generations and the remaining 20 per cent set aside for economic stabilisation.
Naira falls by 0.16 per cent

In a related development, the Naira eased to an eight-month closing low of 165.55 against the dollar, yesterday, due to strong dollar demand from importers and companies reducing their exposure to the local currency, dealers said.

The naira fell 0.16 percent from Monday’s close of 164.28 to the dollar, a level last seen on Feb. 21, a day after the President suspended the former Central Bank Governor, sending financial markets into a tailspin.

Concerns about the falling price of oil, Nigeria’s main source of foreign currency earnings, contributed to the drop. The local subsidiary of Chevron sold $45 million to Nigerian banks, dealers said, but that was not enough to support the naira.

“At the current level, we expect the Central Bank to step in or else the Naira will fall further,” one dealer said.

The currency has lost 4.1 per cent against the dollar so far this year and is trading above the Central Bank’s target range of within 3 per cent of 155 naira to the dollar.

Demand for hard currency was coming from local importers and companies worried about the risk of a devaluation, dealers said.

“We admit that prospects of a near-term devaluation have risen, thanks largely to the recent decline in oil prices,” economists at Morgan Stanley said in a note, adding that the authorities would be reluctant to devalue ahead of an election due in February.

Brent crude held gains around $86 a barrel on Tuesday as news of robust Chinese oil demand buoyed the market, although prices were capped by oversupply and concerns about the health of the rest of the global economy.

- See more at:

News & Happenings / NDPR discovers huge gas in Ogbele field
« on: October 22, 2014, 11:19:18 AM »

Nigerian independent oil producer, Niger Delta Petroleum Resources (NDPR)  has discovered  387 feet Net Gas Sand (NGS) in seven reservoirs in Ogbele- 8, onshore eastern Niger Delta. The well proved new hydrocarbon occurrences in two reservoirs (D7 and E 8)  with a substantial gas reserves, investigation by the Daily independent has revealed .

The oil  field, that started  production of crude oil in 2005, also provides 26 million standard cubic of gas daily to the Nigerian Liquefied Natural Gas (NLNG) system in Bonny.  Ogbele has not been considered primarily a gas field. But this new find means, said Layi Fatona, Managing Director of the company who reacted on the development, the firm has business plans for the use of the gas.  “We have a substantial gas business plan. It therefore  makes sense for us to  immediately commence plan for additional gas production,” he added.

Gas from Ogbele is currently being produced from the G3 reservoir in Ogbele 1. This is expected to be complemented  in the 4th quarter of 2014 with gas from the E6 and E 7 reservoirs in Ogbele 6, which was completed in 2Q 2014. With the results of Ogbele 8, the reservoirs: E8, G1 and G3 will be part of the pool from which to draw from.

Drilling and completion of Ogbele 8 is part of the company’s $90 million two-year campaign involving 6-8 wells. The Acme 5 rig has now moved to another slot where it will drill Ogbele 9, 10 and 11.

The development means  the company will increase its output to the NLNG system. The economy “will be driven from the perspective of a wider gas purchaser base.  We  are becoming a modest gas player,” Fatona further stated.

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