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Argentina to Ease Currency Controls After Devaluation

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NEW YORK – Argentina scrapped some of its currency controls a day after devaluing the peso as policy makers sought to stem a financial crisis and restore investor confidence by reversing measures that drove foreign reserves to a seven-year low.

Bonds fell and the cost to insure the South American nation’s debt against default soared to a three-month high as traders bet the move could backfire and lead to further dollar outflows. The peso dropped 1.9 percent to 8.0307 per dollar at 12:57 p.m. in Buenos Aires, extending its plunge this week to 18 percent, the worst selloff since a devaluation that followed the country’s record sovereign default in 2001.

The currency market overhaul is the latest, and boldest, measure tried by President Cristina Fernandez de Kirchner as she seeks to win back investors, regain access to international debt markets, shore up a faltering economy and curb inflation that soared to 28 percent last year. The increase to 23.8 percent in the annual cost to protect the nation’s debt against default makes it the most expensive in the world.

The easing of controls is an attempt to stem panic among Argentines, said Siobhan Morden, head of Latin America fixed income strategy at Jefferies Group LLC. “They are hoping it creates less panicky demand for dollars.”

She said the country needs to implement additional measures such as curbing money supply growth to make the foreign-exchange policy changes effective.

“Markets will give them a day or two,” Morden said. “But if there’s no follow-up, the prices trade lower again.”

Black Market

Cabinet Chief Jorge Capitanich, who was appointed in November to help reshape government policies, unveiled the currency market changes in Buenos Aires today.

Argentines will be able to buy dollars in proportion to their income, and a 35 percent redeemable tax on buying foreign currency will be cut to 20 percent, he said. Currently, Argentines are often denied requests to buy dollars from the central bank, fueling illegal street trading in which the peso has changed hands at as little as half the value. Policy makers are trying to close the gap between the two exchange rates.

“Our administered currency policy has reached an acceptable level of convergence for our economic objectives,” Capitanich said at the presidential palace.

After a surge in economic growth fueled by rising commodity export prices following the default, the government has implemented a series of unsustainable measures and is being forced to reverse tack, Nobel laureate economist Joseph Stiglitz said.

Forced Changes

“Reality will clearly force some changes: you have to live within your means, if your currency is going down, it means you’re going to be paying more for your imports,” Stiglitz, a Columbia University professor, said in an interview today on Bloomberg Television. “They will have to change their policies and the question is when and how.”

Fernandez’s policies of printing money to fund social spending on subsidies while freezing utility rates amid accelerating inflation are unraveling as the budget deficit widens and funding from the treasury and pension fund grows. Investment in South America’s second-largest economy has tumbled amid import controls and delays in approving company dividend repatriations.

The International Monetary Fund, which censured Argentina last year for misreporting inflation, predicts economic growth will slow to 2.8 percent this year, about half the 5.1 percent average across developing nations.

Yield Spread

The cost to insure Argentine debt against default for five years soared the most since August, climbing 1.94 percentage points to 23.76 percentage points, according to data compiled by Bloomberg.

The extra yield investors demand to buy Argentine bonds instead of U.S. Treasuries widened 16 basis points, or 0.16 percentage point, to 1,012 basis points, according to data compiled by JPMorgan Chase & Co. The peso’s plunge to a record low has made it the world’s worst performer this year.

“Those who wanted us to believe that the dollar was worth 1 peso now want us to believe that it’s worth 13,” Economy Minister Axel Kicillof said today.

Capital Flight

After winning re-election in 2011, Fernandez began to restrict access to foreign currency amid capital flight that surged to a record $21 billion that year. Since then, the government has implemented more than 30 measures to cut access, including taxes on credit card purchases and limits on online spending, that have failed to curb dollar demand.

Reserves have tumbled at a rate of $1.1 billion a month over the past year to a seven-year low of $29.3 billion. Energy imports increased 23 percent to $11.4 billion in 2013 while exports fell 24 percent to $5.3 billion.

Reserves have fallen about $18 billion since October 2011, when the government began to limit access to foreign currency.

In the first three quarters of 2013, the nation posted a current account deficit of $1.27 billion, the largest for that period since its economic crisis. Argentina’s trade surplus narrowed 27 percent to $9 billion in 2013 as fuel imports rose and soy prices dropped 28 percent, while producers withheld stocks of the oilseed waiting for the peso to weaken further.

The easing of restrictions may allow the government to stabilize currency imbalances and promote investment, former central bank president Mario Blejersaid in an interview in Davos.

“All measures that seek to reduce the chaos and intervention” in the currency market “would tend towards stabilizing the situation,” Blejer said. “A devaluation was needed because the exchange rate policy has been erratic in the past years.”

– BLOOMBERG

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PENGASSAN Urges Strategic Focus on Local Refining Expansion

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The Nigerian authorities have been called upon to focus on strengthening domestic refining capacity.

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) made the call in a communiqué issued at the end of the three-day PENGASSAN Energy and Labour Summit (PEALS 2026).

It stressed the need for adequate protection for refineries operating in the country.

The PENGASSAN said Nigeria must reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products by creating an environment that supports domestic refining and other value‑adding activities.

The communiqué, signed by the union President, Festus Osifo, and General Secretary, Jerry Amah, stressed the need to protect refineries, including Dangote Refinery and Waltersmith Refinery.

The association said the expansion would enable Nigeria to retain a greater share of the value generated from its petroleum resources while creating jobs, conserving foreign exchange and stimulating industrial development. PENGASSAN linked the growth to wider opportunities in petrochemicals, gas processing and other downstream activities.

READ ALSO: Umar Cautions Against Irregular Policies in Nigeria’s Oil Industry

The communiqué reads in part: “The summit called for sustained policies and investments to expand Nigeria’s domestic refining capacity and reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products. The need to protect refineries (such as Dangote Refinery, Waltersmith Refinery, etc.) within Nigeria’s jurisdiction was emphasised.

“Nigeria must progressively retain more value from its petroleum resources through domestic refining, petrochemicals, gas processing and other value‑adding activities capable of generating employment, conserving foreign exchange and stimulating industrial growth.

“Ultimately, the strength of Nigeria’s oil and gas industry will not be measured merely by the resources beneath the ground, but by the projects delivered, the value created, the Nigerian capabilities developed, the decent jobs sustained and the prosperity generated for the Nigerian people.”

The association also warned that abrupt policy changes, overlapping mandates, repetitive approvals and conflicting directives increase the cost of doing business and weaken Nigeria’s competitiveness for global energy capital.

The PENGASSAN called for faster regulatory approvals, digitalised processes and clearer timelines, arguing that the effectiveness of regulation should be measured by its impact on investment, production, government revenue, job creation and national value rather than simply by the number of licences or approvals issued.

On gas, the PENGASSAN advocated an integrated approach to developing Nigeria’s more than 215 trillion cubic feet of proven reserves, including investments in processing facilities, pipelines, storage, LNG, LPG and CNG infrastructure. It said gas should be deployed more aggressively for power generation, manufacturing, transportation, fertiliser and petrochemical production.

The association also urged stronger protection of workers’ rights, occupational safety and employment during mergers, acquisitions, divestments and asset transfers, saying sustainable investment requires skilled and fairly treated workers and that increased production must not come at the expense of workers’ lives and wellbeing.

In addition, the PENGASSAN said the next phase of Nigeria’s petroleum industry must focus on execution with measurable targets and clearly assigned responsibilities to ensure policies translate into projects, production, investment and sustainable employment.

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PENGASSAN to Link Up with NUPRC to Unlock 3mmbopd

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Two key stakeholders in Nigeria’s oil and gas industry have resolved to work closed to unlock three million barrels per day (bpd) of crude oil by 2030.

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), according to the new President of former, Comrade Bosun Olabiyi-Agoro, would be working closely with each other to attain the objective.

He made the disclosure on Wednesday while on a visit to the NUPRC corporate headquarters.

The Head, Media and Corporate Communications, NUPRC, Eniola Akinkuotu, who made the disclosure in a statement, also credited the PENGASSAN President with declaring that inasmuch as the union is open to negotiations, issues bordering on the rights of workers to freely associate and join the union are non-negotiable.

READ ALSO: Tinubu Banks on NLNG Train 7 to Boost Nigeria’s Gas-led Economy

He made it public that issues surrounding contract staffing will be one of the key issues his administration will address.

“The President of Nigeria has an ambition which he runs through the CCE which is to make sure that by 2030 we are able to produce three million barrels per day. All of us have to work to make that happen. It will be our happiness to make sure that that target is actually attained. We can assure you that we are here to collaborate. We will be very reasonable,” Olabiyi-Agoro assured.

On her part, the Commission Chief Executive, Oritsemeyiwa Eyesan, said the President Bola Tinubu-led Federal Government had been working assiduously to increase production as evidenced by the latest executive order which is targeted at deep offshore investments. She noted that production had risen from a low of 1.1mmbopd a few years ago to an estimated 1.755mmbopd in 2026.

Seeking the support of PENGASSAN to achieve this target, Eyesan, said industrial stability remained critical to hitting higher production targets.

“As you settle into your new role, be assured that the commission will give you 150 per cent cooperation. In addition to the support we will give you, we want to ask that we work very closely to actualise government objectives.

“We want to grow production from our current level to 3 million barrels in 2030. For gas, we are still doing under 8bcf and we want to grow that to 12bcf by 2030. So, let’s make that happen,” she stated.

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Tinubu Banks on NLNG Train 7 to Boost Nigeria’s Gas-led Economy

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As the multi-billion-dollar Nigeria LNG Limited (NLNG) Train 7 Project reaches more than 90 percent completion, President Bola Tinubu has described it as critical to Nigeria’s gas-led economic agenda.

According to Tinubu, the successful delivery of the project would help expand Nigeria’s gas exports, create jobs, deepen local capacity and strengthen investor confidence in the country’s oil and gas sector.

The President spoke at the State House, Abuja, on Thursday when he received an NLNG delegation led by its Managing Director and Chief Executive Officer, Adeleye Falade.

The delegation briefed the President on the progress of Train 7, prospects for further expansion and challenges affecting the company’s operations and contributions to the national economy.

The discussions also covered the pricing and accessibility of liquefied petroleum gas (LPG), trucking along the Bonny-Bodo Road corridor, NLNG’s contribution to public revenue, its investments in the Bonny-Bodo Road and other social-impact projects, and the need for a more enabling business environment.

Tinubu congratulated Falade on his appointment, describing his assumption of office as coming at a defining period for the NLNG and Nigeria’s gas development ambitions.

Tinubu expressed the view that the completion of the Train 7 project must translate the country’s vast gas reserves into jobs, increased exports, industrial growth and long-term economic value.

“I congratulate you, Leye, on your appointment. Train 7 is at the centre of our national gas agenda. Its success matters not only to NLNG, but to Nigeria’s economic future,” the President said.

Tinubu commended the progress recorded on the project, describing Train 7 as a benchmark for project delivery, partnership, Nigerian content development and investor confidence.

He assured the NLNG management that the Federal Government would continue to improve the business environment, provide greater regulatory clarity and remove bottlenecks affecting major oil and gas investments.

“Nigeria is open for business, but it must be business that creates value at home — building capacity, supporting communities, protecting the environment and contributing to national prosperity. NLNG must continue to lead by example,” he added.

Responding, Falade thanked the President for his administration’s support for NLNG and the broader gas sector, assuring him that the company remained committed to the safe and successful completion of Train 7.

“With the project now over 90 percent complete, our immediate priority is to deliver the remaining work safely, efficiently and to the required quality, while preparing the plant for reliable and sustainable operations,” Falade said.

He said the project would increase Nigeria’s LNG production capacity, support export growth, create opportunities for Nigerian workers and businesses, deepen local participation and generate greater long-term value from the country’s gas resources.

Falade also restated NLNG’s commitment to supporting the domestic LPG market and improving access to cleaner cooking fuel for households and businesses.

He, however, called for coordinated action among the Federal Government, regulators and industry operators to increase domestic supply, improve storage and distribution infrastructure, eliminate avoidable costs and create a more transparent and efficient LPG market.

“Improving LPG accessibility is important to Nigeria’s energy transition and to the wellbeing of millions of Nigerian households. NLNG remains committed to supporting the domestic market, but improving affordability requires coordinated action across the entire LPG value chain,” he said.

The NLNG chief also sought the President’s intervention in addressing ease-of-doing-business challenges, particularly the proliferation of taxes, levies, charges and regulatory demands imposed by different tiers and agencies of government.

According to him, multiple and sometimes conflicting fiscal and regulatory obligations raise operating costs, create uncertainty and could discourage existing operations and future investments.

Falade assured the President that NLNG was ready to align more closely with the Federal Government’s development agenda and explore additional areas of partnership.

The meeting ended with a renewed commitment by the Federal Government and NLNG to sustain momentum on Train 7 as the project enters its final phase.

Both sides also agreed to strengthen their partnership to support the project’s successful delivery and NLNG’s broader contribution to Nigeria’s gas development and economic growth.

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