Oil
Crude oil export may dip in 2014 over political tension, oil theft
PORT HARCOURT – Insecurity and brazen oil theft in the Niger Delta region remain the biggest threats to Nigeria’s economy next year, as these may affect the export of crude, which is the mainstay of the economy.
Government’s efforts at curbing oil theft are not having much impact on the activities of the thieves who see the act as an avenue to acquire wealth, some planning to become local war lords in the Niger Delta.
It is feared the situation would be further compounded by political tensions, as 2015 the election year draws near.
The focus on politics next year, industry watchers anticipate, could distract government’s attention from insurgency in the North and oil theft and restiveness in the Niger Delta.
Industry operators say that oil theft is not abating, contrary to the statements of government.
There are claims that some key agencies and influential individuals are complicit, and that the lure is huge donations from stolen oil money to the political campaigns of some powerful groups and individuals.
This waning attention to the security situation would further lead to decline in oil exports, some industry operators have said.
The country is estimated to be losing over $8 billion to oil theft and supply disruptions a year.
The Executive and the Legislature have been at loggerheads over the what should be the benchmark oil price for the 2014 budget.
While the Executive pegged the bench mark at $74 per barrel, the Senate and the House of Representatives fixed theirs at $76.5 and $79 respectively.
Oil revenues have continued to decline in spite of the relative stability in oil prices and output, when compared with preceding years. This has been attributed to frequent pipeline vandalisation which oil production networks suffered. This has consequently led to several declarations of force majeure by oil companies.
Commenting on this, Eddy Wikina a former external affairs manager with Shell Nigeria Exploration and Production Company (SNEPCO) said government should do everything possible to see that the country’s oil production does not slip to the level of 700 ,0000 barrels per day, as has been the case in the past.
This he said, would not augur well for the economy.
Another person who spoke but does not want his name mentioned, said since 2014 would experience a lot of political activities, it may be dangerous if the president is not re-elected, given the threats coming from some of the militants . “Nigeria’s
economy faces major risks next year from continued declines in oil exports “, he said
The Central Bank of Nigeria (CBN) monetary policy committee said in a statement after its quarterly meeting, that Nigeria’s oil windfall savings
have fallen sharply to less than $5 billion as of November 14, from $11.5 billion at the end of 2012, following the government’s massive withdrawal to augment lower oil revenues this year.
“Clearly, the major risk on the fiscal side at present is not one of escalation of spending but loss of revenue from oil exports. The outlook for 2014, however, portends some potential headwinds that may lead to further tightening in monetary conditions.”
With spending expected to jump next year, in preparation for 2015 elections, the bank urged the government to ensure it was “blocking fiscal leakages in the oil sector and increasing oil revenues,” in order to build up savings again.
– BUSINESS DAY
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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