OPEC oil output falls from near-record in May on Nigeria outages – Reuters

* OPEC supply falls by 120,000 bpd to 32.52 million bpd

* Nigerian output plunges, Libyan drops further

* Iranian supply climbs further after sanctions lifted

* UAE, Kuwait raise output after maintenance, strike

* For a table of OPEC output, see

By Alex Lawler

VIENNA, May 31 (Reuters) – OPEC’s oil output fell in May from near a record high, a Reuters survey found on Tuesday, as attacks on Nigeria’s oil industry and other outages outweighed increases in Iran and Gulf members.

A rise in supply from Saudi Arabia plus Iran suggests the group’s top producers remain focused on market share, following the failure of an initiative in April between OPEC and non-OPEC producers to support prices by freezing output.

With OPEC meeting in Vienna on Thursday, outages are effectively achieving the supply restraint on which producers could not agree. Those disruptions are supporting oil prices , which are close to 2016 highs, and the rally has reduced the urgency of any new attempt at deliberate supply curtailment.

“There is a tiny chance of a bullish surprise but as things stand right now, the odds are the continuation of OPEC’s market-share policy,” said David Hufton, of oil brokers PVM.

Supply from the Organization of the Petroleum Exporting Countries fell to 32.52 million barrels per day (bpd) this month, from 32.64 million bpd in April, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants.

OPEC output has surged since the group abandoned in 2014 its historic role of cutting supply to prop up prices, in a shift led by Saudi Arabia. There are more indications, however, that some producers are struggling to maintain supply.

May’s biggest decline occurred in Nigeria due to militant attacks on the country’s oil industry. The disruption has pushed output to its lowest in more than 20 years.

Libyan output declined further due to a blockage of shipments from the port of Hariga. Loading difficulties and other problems made a further dent in Venezuela’s supply, sources in the survey said.

Iraq, the fastest source of OPEC production growth in 2015, also pumped less as power outages limited southern exports, which in April were at a near-record.

Of the countries boosting output, Iran managed a further increase after the lifting of Western sanctions in January.

At 3.55 million bpd, Iranian output has more than matched the 3.50 million bpd it pumped at the end of 2011 before sanctions were tightened, according to Reuters surveys. However, any further rises will be smaller, sources said.

“Getting back to pre-sanctions output was not a problem,” said a source familiar with Iranian thinking. “Getting beyond that will be harder.”

Saudi Arabian output edged up to 10.25 million bpd, compared with 10.15 million bpd in April, the survey found.

“Exports are higher,” said an industry source who monitors Saudi output. “But production is not really changing very much.”

Other increases came from the United Arab Emirates, following the end of maintenance on oilfields, and Kuwait as supply rebounded after a three-day workers’ strike in April cut output.

 

Nigeria’s Q1 trade account turns negative as oil prices fall – Reuters

By Chijioke Ohuocha

LAGOS May 31 (Reuters) – Nigeria’s trade account turned negative in the first quarter after exports fell by almost half, the national bureau of statistics said on Monday, as lower prices for crude oil slashed government revenues and caused the economy to contract.

Nigeria, Africa’s biggest economy, faces its worst economic crisis in years. The value of its exports, mostly crude, plunged 52 percent to 1.27 trillion naira ($6.4 bln) in the three months to March from a year ago. Much of the hard currency it needs to finance imports evaporated.

With limited manufacturing capacity, Nigeria imports most of what it consumes. First-quarter imports dropped 15.8 percent to 1.45 trillion naira ($7.3 bln), the statistics bureau said, pushing the trade account crossed into the red for the period.

The balance of trade for the first quarter was minus 184.1 billion naira ($925.13 million), down from plus 937.4 billion naira in the same period a year earlier. Net trade balance stood at $14.5 billion for 2015.

“The total value of Nigeria’s merchandise trade at the end of Q1 stood at 2.72 trillion naira. This development arose due to a sharp decline in both imports and exports,” the statistics office said.

Nigeria’s exports fell 34.6 percent by March from the last quarter and imports declined 7.8 percent. The decline in crude oil exports, which accounted for 64.7 percent of total domestic exports, hit the economy the most.

Nigeria’s economy shrank by 0.36 percent in the first quarter, compared with 3.96 percent growth last year, as currency controls started to bite. The limits on currency were imposed by the central bank to support the naira as oil prices fell.

The dollar restrictions have also caused inflation to spike. This month, the statistics office said, annual inflation climbed close to a six-year high of 13.7 percent in April.

Nigeria’s central bank said last week it would introduce a flexible currency regime and abandon its naira peg to the dollar, a policy U-turn designed to improve exports, local manufacturing and stave off a recession.

However, the bank has yet to clarify how the new policy would work, spooking foreign investors, long worried about getting caught in the middle of a currency devaluation. Nigeria’s stock market posted its biggest daily decline in 16 months on Monday.

President Muhammadu Buhari also has backed central bank’s decision to move away from the dollar peg, which is seen as overvaluing the naira, after rejecting earlier calls to devalue the currency.

Nigeria exported mainly to Asia and Europe. Imports were dominated by machinery, petrol, chemicals and related products from Asia, Europe and Americas. Imports within Africa grew by 5.7 percent.

 

Nigeria’s forex reserves down to $26.5 bln by May 23 – Reuters

LAGOS May 31 (Reuters) – Nigeria’s forex reserves fell to $26.50 billion by May 23, down 2.8 percent from a month ago, central bank data showed.

Its dollars reserves stood at $27.26 billion a month ago. They have dropped 10.9 percent from last year when they were at $29.73 billion.

A plunge in oil prices has eaten into Nigeria’s foreign reserves, forcing the central bank to introduce currency controls, which has frustrated businesses and caused the economy to contract. (Reporting by Oludare Mayowa; Editing by Angus MacSwan)

 

Top 5 Ministers on the hot seat – One Year Anniversary Edition

By Ugo Nwagwu

Yesterday, we celebrated commemorated Democracy Day. It also marked the one year anniversary of APC and President Muhammadu Buhari’s rule.

Several weeks ago, we ranked the Top 5 Ministers on the hot seat. As you can imagine, these things are fluid. Yesterday’s prisoner can be tomorrow cup bearer. You’d understand if you read your bible.

So I believe it’s only fair to update the list and see where we are right now.

  1. Tie- Minister of State for Petroleum – Emmanuel Ibe Kachikwu

Ibe-Kachikwu

Previous Rank – 2

The fuel supply situation has been resolved although at a massive inflation inducing cost. After the prices of a liter of PMS aka petrol went up from N86 to N145, every supplier all of a sudden had so much product to sell that the queues essentially died overnight. However multiple issues still plague the office, the biggest being the seemingly daily bombings of Nigeria oil pipelines. The effect is a reduced production capacity of over 50% which means Nigeria can’t even take advantage of recent spike in oil prices. Kachikwu is the face of the Oil and Gas sector and right now, he needs a lot to start going his way if he’s to hold onto this job for the long haul.

  1. Tie – Minister of Petroleum – President Muhammadu Buhari (PMB)

buhari33

Previous Rank – 1

Many Nigerians still don’t agree with a president Buhari filling the position with himself. That said, as Minister of Petroleum, he shoulders the responsibilty for the issues that come up. Right now, the biggest on his plate is the terrorist activities perpetrated by militants from the South-South. Oil revenues are down due to poor supply as a result of blown up pipelines. PMB is planning on visiting the troubled region which may be a first step to stemming the violence. Some say increased military action is the way to go while others advocate negotiations. Perhaps a combination of both could be the solution. Nevertheless, if the situation continues, no doubt it could devastating effects to the legacy of this administration.

  1. Minister of Information – Lai Mohammed 

Previous Rank – 5

The only reason Alhaji Lai Mohammed isn’t higher on the list (and perhaps the reason he still has a job) is that those higher on the list have significantly more pressing issues to deal with and are thus under more pressure. One of the knocks on the current administration is the lack of a cohesive message. It has become routine to have cabinet ministers contradict themselves when talking about the same issues. This is one of the many roles of an information minister; ensure that the administration speaks with one voice. So this marks a failure on his part. The leaked document of the minister seeking loans for foreign travel was also embarrassing if not scandalous. If such things continue, Alhaji Mohammed would no doubt find himself higher up this list and perhaps out of a job soon.

  1. Minister of Agriculture and Rural Development – Chief Audu Ogbeh

index

Previous rank – Unranked

Tomato Ebola? Considering that tomatoes are a major ingredient in many Nigerian dishes, it is unsurprising that there is a public outcry over the scarcity as well as the soaring cost of the vegetable crop due to a pest ravaging tomato farms across the nation. Chief Ogbeh is on this list because the situation has reached critical mass. The fact that this isn’t the first time this pest has been an issue and that it has been tackled without fanfare in the past under previous administrations is troubling. It also speaks to a lack of foresight by the ministry and all fingers point to the head. If this isn’t tackled with intensified efforts and the “jollof rice enjoyment index” suffers, Chief Ogbeh might want to brush up on his resume because the average Nigerian will call for blood and he may be the fall guy.

  1. Minister of the Niger Delta – Usani Usani Uguru

Uguru

Previous Rank – Unranked

One of the reasons for this list is accountability. Let us make famous those who appear to be incompetent at the execution of their jobs. While the apparent portfolio of the Niger Delta Ministry might not be easily accessed, it is safe to assume that what is going on in the Niger Delta should fall under his jurisdiction and it is currently completely unacceptable. Mr. Uguru should bear some responsibility for this. If a country operated as a business entity and the largest revenue source fell by more than 50%, there’s no doubt the division head would be on the outside looking in. Mr. Uguru should have been much more proactive in checkmating the source of anger in the region and at the very least found way to bridge the divide between the administration and the communities. If he’s not up to the job or doesn’t feel this is his responsibility, then it is time for him to go.

  1. Minister of Finance – Folake Adeosun

kemi-adeosun-e1451378049121

Previous Rank – 4

The economy is on the verge of recession (back to back quarters of economic contraction). The nation just experienced its first quarter of contraction in over a decade. Foreign Direct Investments (FDI) are practically nonexistent. Just last week, United Airlines announced it was pulling out of Africa’s largest country, a move already made by Spanish airline, Iberia. Dozens of other foreign companies are considering pulling out. Right now, the Nigerian economy is in shambles. As such many people think that the Finance Minister, Folake Adeosun is way in over her head in this job. President Buhari recently remarked that it would be up to Nigerians to tell him who isn’t performing among his cabinet members. If one had to be chosen, many if not most Nigerians would opt for the former finance commissioner.

* Just missed joining the ranks

– Minister of Industry, Trade and Investment: Okechukwu Enelemah

– Minister of Labour and Employment: Chris Ngige

– Minister of Budget and National Planning: Udoma Udo Udoma

 

** Dropped off from last ranking

– Minister of Power, Works and Housing – Babatunde Raji Fashola

Lost Year in Nigeria Under Buhari Leaves Economy on Knees – Bloomberg

By Paul Wallace

  • President hasn’t delivered on promises to stimulate growth
  • Economy on verge of recession as militant attacks increase

Muhammadu Buhari took office as Nigeria’s president a year ago on a wave of optimism that the ex-military ruler could revive a nation battered by falling oil prices and decades of corruption. Now Africa’s biggest economy is on its knees.

Nigeria will soon enter a recession, according to the central bank, and an upsurge of militant attacks since February has sent crude production, which usually accounts for 70 percent of government revenue, plummeting to an almost 30-year low. Delays in approving a budget and a cabinet — by six months — as well as Buhari’s refusal to weaken an overvalued currency have caused foreign investors to flee.

“It was difficult to imagine a scenario in which things got worse,” said Malte Liewerscheidt, a Nigeria analyst at Bath, U.K.-based consultant Verisk Maplecroft. “But it’s been a lost year. What’s missing is sound macroeconomic policies.”

Foreign investors, fearing a devaluation, are staying away. Foreign direct investment was the lowest last year since the 2007-08 global financial crisis, and Citigroup Inc. said deals have ground to a halt. The curbs prompted JPMorgan Chase & Co. in September to kick Nigeria out of its local-currency emerging-market bond indexes, tracked by more than $200 billion of funds.

Bond Losses

This year, Nigeria’s local-bond yields have climbed 270 basis points to 13.4 percent, leaving them as the only such securities among 31 emerging markets tracked by Bloomberg to make losses. Electricity output has plunged to about a 30th of that of South Africa, Africa’s second-biggest economy, as attacks on pipelines cut supplies of natural gas to power plants.

When Buhari beat then-President Goodluck Jonathan in the first election victory by an opposition candidate, U.S. President Barack Obama’s administration called it an “historic step for Nigeria and Africa.” A 73-year-old retired major-general who ruled from 1983 to 1985, Buhari campaigned to end the corruption he said was “killing” his country. He and his All Progressives Congress party promised to crush Boko Haram’s Islamist militant group whose war has led to thousands of deaths in the northeast since 2009 and foster economic growth of as much as 10 percent.

Naira Peg

Now recession looms. The economy contracted in the first quarter by 0.4 percent, the first decline since 2004. If Buhari doesn’t alter his stance on the naira and loosen capital controls to defend its peg to the dollar, output will probably sink further, according to Mark Bohlund, an Africa economist with Bloomberg Intelligence in London.

“The Nigerian economy is at high risk of experiencing its first full-year recession since 1987,” Bohlund said. An improvement next year depends on security being restored in the oil-rich Niger River delta region and “a shift toward more market-based economic policy.”

Buhari was dealt a tough hand. He inherited a virtually empty treasury and Jonathan’s administration did little to diversify the economy, leaving it vulnerable to the crash in oil prices since 2014. A rainy-day fund known as the Excess Crude Account was whittled down to barely $2 billion when Buhari took office, from $21 billion in 2008.

Boko Haram

The president has won plaudits from investors for beating back Boko Haram and trying to overhaul graft-ridden institutions, including the Nigeria National Petroleum Corp., the management of which he sacked. Yet they have been left bemused by his economic policies.

He opted to keep gasoline prices capped at 87 naira ($0.44) a liter ($1.76 a gallon) until months of shortages and unrest over long fuel lines forced him to increase them by 67 percent in mid-May. He has also clung to the naira peg even as evidence showed a dollar shortage was strangling the economy. Buhari continues to oppose devaluation, though he had given the central bank leeway to implement a more flexible currency regime, his spokesman, Garba Shehu, said on Monday.

Under Governor Godwin Emefiele, the central bank — with Buhari’s backing — began to fix the naira at 197-199 against the dollar in late February 2015, even as other oil exporters from Russia to Colombia and Kazakhstan let their currencies drop.

Businesses are struggling to operate as the central bank, whose reserves have fallen to a more than 10-year low, runs out of the dollars they need to import raw materials and equipment. Many are forced to turn to the black market, where the naira value has plunged to around 350 per dollar. That’s pushed the inflation rate to 13.7 percent, the highest in almost six years.

Currency Squeeze

U.S. carrier United Airlines said would it stop flying to Nigeria next month, in part because of the hard-currency squeeze. Foreign airlines have the naira-equivalent of $575 million trapped in the country that they can’t repatriate, according to the International Air Traffic Association. The Africa president of Unilever, whose Nigerian unit has seen its shares drop 29 percent since Buhari became president, called the currency policy “very insane.”

The central bank’s Monetary Policy Committee voted on May 24 to allow “greater flexibility” in the foreign-exchange market, which investors hoped meant that banks would be allowed to trade the naira more freely. Yet, while Emefiele said a new system would be unveiled “in the coming days,” no changes have been made.

Policy Failure

It was an “admission of the inevitable failure of the policy, which created a black market economy,” said Kingsley Moghalu, a former deputy governor at the central bank who now teaches at Tufts University in Boston. “The exchange-rate policy contributed quite significantly to creating a recessionary situation. It hit manufacturers, who could not access forex. It has created unemployment.”

Nigeria’s 36 states, most of which depend on monthly handouts from the federal government, are on average three to four months late on salary payments to teachers, doctors and other civil servants, according to the oil minister.

The economy is so weak that Finance Minister Kemi Adeosun says officials probably won’t be able to collect enough taxes to meet the revenue target in this year’s record 6.1 trillion naira budget, which was only passed this month after senators said Buhari’s team made mistakes in the first version sent to them.

“There’s a sense of exasperation among investors,” Ronak Gopaldas, a Johannesburg-based analyst at Rand Merchant Bank. “There’s still a level of goodwill toward Buhari and his government but it’s dissipating. The man on the street is really struggling.”

 

Nigerian Naira Crashes By 43.2% At Interbank Market – Nigerian Bulletin

The Nigerian naira at interbank market has crashed to N285 to the dollar ahead of the release of modalities for the implementation of the adopted flexible exchange rate policy as announced by the Central Bank of Nigeria (CBN).

This was sequel to increased perception that CBN has withdrawn from the weekly foreign exchange (forex) intervention, which forms part of the newly adopted policy, paving the way for banks and Bureau De Change (BDC) operators to source forex autonomously and sell according to market dynamics, Guardian reports.

The interbank rate had run nearly at par with the official at N199 per dollar and N197 per dollar respectively before the pronouncements on the new foreign exchange measure.

The new rate represents about 43.2 per cent increase from N199 to the dollar it previously traded, which according to analysts suggests that the market is gradually adjusting itself to the new direction, although the details are yet to be unfolded.

The CBN Governor, Godwin Emefiele, had last week after the Monetary Policy Committee meeting said that while adopting the new policy, the apex bank would only open a small window for critical transactions, which relate to the import of plants and equipment to produce goods for which their raw materials are almost 100 per cent available locally.

 

Buhari Gives Central Bank Go-Ahead for Flexible Naira – Bloomberg

By David Malingha Doya

Nigeria’s President Muhammadu Buhari has given the nation’s central bank the go-ahead to introduce flexibility in the naira exchange rate, his spokesman said on Monday.

“The president is opposed to devaluing the naira, he has said so repeatedly,” Buhari’s spokesman, Garba Shehu, said in an interview on state-controlled NTA Television. “He has given them leeway to introduce what he has called ‘flexibility in managing’” the currency’s value, Shehu said, referring to the central bank.

Buhari said at the weekend he supported a stable currency, though he would keep “a close look at how recent measures affect the naira and the economy.” The comments, made four days after the Central Bank of Nigeria said it planned to introduce a more flexible exchange-rate regime, left traders guessing whether he supported those measures.

Nigeria has held the naira at 197-199 per dollar since March 2015, even as other oil exporters from Russia to Colombia and Malaysia let their currencies drop amid the slump in crude prices since mid-2014. Foreign reserves dwindled as the central bank of Africa’s largest oil producer defended the peg, while foreign investors, fearing a devaluation, sold Nigerian stocks and bonds.

Lagos’ Aje Oilfield Produces in Excess of 10,000 bpd – Thisday

Ejiofor Alike

The two wells in Aje oil field located in Oil Mining Lease (OML) 113, offshore Lagos, have tested in excess of 10,000 barrels of oil equivalent per day, Panoro Energy, an independent oil and gas company based in the United Kingdom, has announced.

After spending over two decades exploring for hydrocarbon resources off the coast of Lagos, Yinka Folawiyo Petroleum, in partnership with Panoro Energy ASA and First Hydrocarbon Nigeria (FHN) Limited, among others, had on May 3, 2016 achieved first oil on Aje field, catapulting Lagos State into the league of oil and gas producing states in the country.

In its first quarter 2016 financial results released at the weekend, Panoro announced that the two wells in Aje field have tested in excess of 5,000 bopd each.
Chief Executive Officer of the company, Mr. John Hamilton, CEO of Panoro, commented that his company was extremely pleased to have reached first oil production at Aje, offshore Nigeria.

“This is a transformational milestone and establishes Panoro as a full cycle E&P company. In Gabon, we continue to see enormous potential upside at Dussafu where we are working on securing partners to drill an exploration well. We feel this well will be the catalyst to move the project forward and unlock its inherent value. Having achieved production at Aje, we have established a strong platform from which to grow Panoro and add value for our shareholders. Looking forward, our strategy is to now expand our portfolio by acquiring further high quality production and development assets in West Africa,” Hamilton explained.

The first two wells in Aje Are expected to peak at 12,000 barrels of oil per day, and the flow rates would increase as more wells are drilled on the field.

However, of greater significance also is the disclosure that the oil field holds untapped reserves of about 650 billion cubic feet (bcf), which if harnessed in two to three years’ time, could supply Lagos, Nigeria’s commercial hub, all the gas feedstock it needs for the thermal power stations and other manufacturing concerns domiciled in the state and its environs.

The subsea installation activities had been underway at Aje since January and were completed in early March, ready for the hook up of the Front Puffin Floating Production Storage Offshore (FPSO), which arrived in Nigeria on March 16.
Oil produced from the Aje field will be stored in the Front Puffin which has a production capacity of 40,000 barrels of oil per day (bpd) and storage capacity of 750,000 barrels.

Located in the extreme western part offshore Nigeria, adjacent to the Benin border in the Dahomey Basin, the field is situated in water depths ranging from 100 to 1,500 metres, about 24 kilometres from the coast.
The field is situated 64 kilometres from Lagos and 12 kilometres close to the West African gas pipeline operated by Chevron.

The current Aje partnership, which was formed in August 2013, is made up of Yinka Folawiyo Petroleum (operator), New AGE (African Global Energy), FHN, Energy Equity Resources (EER), Panoro, and Jacka Resources.

Buhari to visit restive Niger Delta region this week – Reuters

By Felix Onuah and Anamesere Igboeroteonwu

ABUJA/ONITSHA, Nigeria May 30 (Reuters) – Nigeria’s President Muhammadu Buhari will on Thursday visit the Niger Delta region, rocked by attacks on oil and gas facilities, for the first time since taking office a year ago, an official said on Monday.

The visit was announced as the Niger Delta Avengers militant group, which has claimed a string of recent attacks, issued a warning to oil firms in the southern region that their “facilities and personnel will bear the brunt of our fury,” according to a statement.

Buhari said on Sunday said the government would hold talks with leaders in Nigeria’s main oil-producing region to address their grievances, in a bid to stop a surge in pipeline attacks.

Buhari will visit a Niger Delta area called Ogoniland to launch a much-delayed programme to clean up areas heavily polluted by oil spills, said the government official who asked not to be named.

Residents in the southern swamp areas, where oil giants such as Royal Dutch Shell and Chevron operate, have for years complained about the oil industry’s pollution and about economic marginalisation by the government.

Some have taken up arms, and a surge in attacks on energy installations has cut Nigeria’s oil output to a 20-year low.

A militant group called Niger Delta Avengers, which staged several attacks in recent weeks, has accused Buhari, a Muslim from the north, ignoring local problems by having never visited the Christian region in the south.

“To the international oil companies and indigenous oil companies, it’s going to be bloody this time around,” the group said in a statement late on Monday. It did not elaborate.

Local officials and Western allies such as Britain have told Buhari that moving army reinforcements to the Delta region would not be enough to stop the attacks and that the population’s grievances should be dealt with.

On Thursday, Oil Minister Emmanuel Ibe Kachikwu said an amnesty programme for former militants, signed in 2009 to quell a previous insurgency, needed to improve.

The scheme providing cash benefits and job training to those who lay down their arms has had its funding cut by two thirds. Buhari has also upset former militants by ending contracts to protect pipelines, part of a drive to tackle graft.

Naira Exchange Rates Black Market – May 31, 2016

Naira Exchange Rates Black Market – May 31, 2016. These are the prevalent rates for the City of Lagos. Actual rates may vary slightly based on vendor. Rates are updated during the day as they change.

NAIRA (N)

USD ($)

EURO (€)

GBP (£)

BUY/SELL

BUY/SELL

BUY/SELL

31/5/2016

344/350

385/390

495/500

27/5/2016

343/350

385/395

495/500

26/5/2016

355/360

380/390

490/495

25/5/2016

345/350

385/390

490/495

24/5/2016

342/347

390/395

490/495