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Nigeria faces deep financial crunch as crude oil falls below $50 per barrel

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By Kunle KALEJAYE

Crude Oil

Crude Oil

LAGOS-Nigeria may be in for a terrible financial quagmire as the price of Brent oil drops below $50, for the first time since 2009.

Nigeria had based its N4.3 trillion budget for 2015 on an oil price of $65, but the projection appears to have exploded into smoke. The budget, which allocates 91 per cent of projected expenditure on recurrent expenses may need a rejigging and a drastic cutback on the money to be spent on public officials and National Assembly.

The Nigerian budget for this year had been twice reviewed. Analysts said Dr.Ngozi Okonjo-Iweala and her team may need the big scissors all over again.

The new price regime was triggered by OPEC’s production stance, oversupply, weak demand and the strong dollar.

On Wednesday, 7th January, 2015 London deals, Brent North Sea crude for delivery in February dived to a 5.5-year low at $49.81 a barrel. New York crude had already slumped under $50 on Monday 5th January, 2015.

“The move below $50 shows how momentum is everything here,” CMC Markets analyst Michael Hewson told AFP.

“With no sign that OPEC will do anything about over-production, it seems likely that we could well see further declines towards $40 in the coming weeks — particularly given that demand shows no signs of picking up.

“Weak growth and weak demand in China and Europe are likely to continue to be the main drivers as the battle for market share intensifies. We’ll probably still see sharp swings in the interim but the direction of travel seems clear, unless OPEC acts.”

Crude futures had tumbled Tuesday to fresh multi-year lows in another stormy day for global financial markets, as OPEC kingpin Saudi Arabia blamed weak global economic growth and said it will stick to its guns on production policy.

On Monday,5th January, 2015 Saudi Arabia reportedly cut its European and US export prices in order to maintain market share.

Oil has lost more than half its value since June owing to a global supply glut and slowing growth in major world economies that has hurt demand.

Losses accelerated in November after the 12-nation Organization of the Petroleum Exporting Countries (OPEC) cartel decided not to cut output in response to lower prices and oversupply.

OPEC opted to keep its oil output ceiling at 30 million barrels per day despite ample global supplies.

Analysts said the move was aimed at stifling competition from new market players with higher costs — in particular US shale oil producers.

AFP-

Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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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.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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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.

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ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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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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