NIGERIA: THE CRUDE OIL ECONOMY

Synterra the Nigeria Risk Management Consultants provide insight into how the oil markets affect the Nigerian economy. Nigeria's reliance on crude oil receipts is total. At a time of increasing volatility and uncertainty this blog seeks to provide an analysis of the effect the global energy markets have on business in Nigeria, their relationship with OPEC and how local policy decision making affects investment opportunities.

OPEC+ ALLIANCE PLOT TO FIND A WAY TO PLEASE THE OIL MARKET

The out and out oil price war has now entered its next phase and has become the chess game that is the new contest for market share. The trigger for this shift was always going to be China's resurgent crude oil imports and the seeming revival of a region that appears to have put the worst of the COVID-19 pandemic demand destruction behind it&n...
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NIGERIA LOSES OVER $440M REVENUES AS OPEC PRODUCTION CUTS TAKE EFFECT

Nigeria is projected to have lost over N160 billion in deferred revenue to a cut in the daily crude oil production by members of the Organisation of Petroleum Exporting Countries (OPEC) in May. However, the impact on gross receipts may be reduced as the country is expected to close the revenue gap with a substantial increase in the international pr...
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SAUDIS FEEL THE HEAT AS THE U.S. UPS THE PRESSURE ON OIL

Saudi Arabia  made what has been described as  a surprise announcement,  it will voluntarily deepen its crude oil output cuts. The announcement stated that this voluntary output cut would take effect from June.

The cut is an additional  1 million barrels per day which will reduce Saudi  production to the lowest level in 18 years. The ostensible reason given by the Saudis is to  hasten  a recovery from the crash in oil price benchmarks which has pitched them  into austerity. According to Energy Minister Abdulaziz bin Salman Al Saud, Saudi Arabia wanted to be ahead of the curve.

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WHAT IS BEHIND NIGERIA'S MARGINAL FIELD BID ROUND?

The Nigerian national oil company has eventually come to its senses and arrived at the position every other rational actor in the industry has advocated and postponed  the full blown Oil bid round which was announced last month as scheduled to take place within 2 weeks. 

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IMF LOAN AT A STEEP COST TO THE NIGERIAN MASSES?

The IMF have approved   US$3.4 billion in emergency financial assistance to the Nigerian Government  under the Rapid Financing Instrument to support the authorities’ efforts in addressing the severe economic impact of the COVID-19 shock and the sharp decline in oil prices. The funding is a loan which attracts low interest and needs to be paid back  within 5 years.

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POOR NIGERIANS RESILIENCE TESTED YET AGAIN AS OIL PRICE COLLAPSES

Nigerians have been told they are resilient, as if they have a choice. A flattery conceived to beguile the masses   living in abject poverty. Often repeated  by a well fed political class that have garnered enough wealth to insulate themselves from the harsh vagaries of the Nigerian existence. 

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BONNY LIGHT SLUMPS TO $12 DESPITE OIL MINISTERS PREDICTION

Bonny Light the most recognisable and one of the most sought after Nigerian crude grades last week  traded at $12 per barrel.  The low sweet flagship Nigerian crude had up until last month historically traded at a premium to dated Brent. Bonny Light has become emblematic of the fate of light sweet crude grades that yield high cuts of transport fuels in a world in lockdowns.

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THE HISTORIC OPEC DEAL TO CUT 9.7MBD THAT DOES NIGERIA NO GOOD

Nigeria have agreed to a production cut of 400,000 barrels a day as their contribution to the OPEC+ agreement. This is based on a 23% cut on a production baseline taken from October 2018. Nigeria also produce between 350-400,000 bpd of condensates which are exempt from OPEC cuts. Condensate is a...
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TIME FOR NIGERIA FIRST POLICY WITH OPEC

The much anticipated OPEC++ meeting takes place tomorrow, It is time for Nigeria to be bold and clear eyed in pursuing Nigeria’s best interests. However it remains unclear as to  what  position Nigeria have decided to adopt. We have heard a number of statements from the Minister of State for Petroleum Resources, Chief Timipre Silva, yet they seem vague and difficult to interpret. The policy is unclear, not so much as inarticulate but unarticulated. To start with Nigeria’s petroleum ministry has stated.

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