Economy
DPR Expects Crude Oil from Licensed Marginal Oilfields in 2022
By Adedapo Adesanya
The Department of Petroleum Resources (DPR) has disclosed that it is expecting the first production of crude oil from some of the recently awarded 57 marginal oilfields in January 2022.
This was disclosed by the Director, DPR, Mr Sarki Auwalu during a strategic engagement session with the Nigeria Extractive Industry Transparency Initiative (NEITI) in Lagos.
Mr Auwalu said the 2020 marginal oilfield bid round was almost at the completion stage with successful companies paying their signature bonuses.
He said the award of the marginal oilfield would increase Nigeria’s oil and gas production capacity and reserves to boost the country’s resources for national development.
Mr Auwalu said the bid round, which began on June 1, 2020, was aimed at deepening the participation of indigenous companies in the upstream segment of the industry.
According to him, it will also provide opportunities for technical and financial partnerships for investors.
The director said some of the indigenous companies that emerged from previous marginal oilfield bid rounds were today competing with international oil companies, which was very good for the nation.
Mr Auwalu further said the DPR generated about N452 billion for the federal government from January to March 2021, adding that the regulatory agency was targeting an additional N900 billion for the months of April to June.
According to him, the department operates a cashless revenue system that enables all revenue remittances to be paid directly to the federation account in total compliance with the Treasury Single Account (TSA) policy of the government.
Mr Auwalu noted that transparency and accountability were critical to sustaining the industry and assured NEITI of the DPR’s support towards its mandate.
On his part, the Executive Secretary, NEITI, Mr Ogbonnaya Orji requested closer collaboration and technical support from the DPR to improve transparency in the oil and gas industry.
Mr Orji said NEITI was committed to ending Nigeria’s ‘resource cause’ which had led to poverty, insecurity, poor economy and hopelessness following years of mismanagement.
He said, “It didn’t start today but it will be better if we show concern on how we utilise our resources.”
“A lot has changed through the activities of NEITI and its reports but a lot still needs to be done because transparency in our extractive industry is very critical,” Mr Orji added.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Adedapo Adesanya
Oil prices gained more than 3 per cent on Friday, after comments by US President Donald Trump and Iran’s foreign minister further dented hopes of a deal.
Brent crude settled at $109.26 a barrel after chalking up $3.54 or 3.35 per cent, and the US West Texas Intermediate (WTI) finished at $105.42 a barrel, up $4.25 or 4.2 per cent. Over the week, Brent has climbed 7.84 per cent and WTI 10.48 per cent on uncertainty over the shaky ceasefire in the Iran war.
President Trump said he was running out of patience with Iran and has agreed with Chinese President Xi Jinping that the Middle East nation cannot be allowed to have a nuclear weapon and must reopen the Strait of Hormuz, which is the waterway where about a fifth of the world’s oil and liquefied natural gas normally passes.
On his part, Iran’s Foreign Minister Abbas Araqchi said on Friday that it does not trust the US and is interested in negotiating only if the US is serious, adding that Iran is prepared to go back to fighting but also prepared for diplomatic solutions.
On the US-China front, while the Chinese President did not directly make a comment on Iran, a statement from the foreign ministry spoke out against the conflict.
Among the deals the market was looking for from the US-China summit, President Trump said China wants to buy oil from the US, also saying he could lift sanctions on Chinese companies that buy Iranian oil.
Iran’s Revolutionary Guards said 30 vessels had crossed the strait between Wednesday evening and Thursday, far from 140 a day that was typical before the war. Two of the 30 vessels that reportedly cleared the Strait of Hormuz earlier this week were tankers, one en route to Japan and the other headed to China.
A prolonged closure of the Strait of Hormuz points toward tighter physical markets, potential refined product shortages, and upward pressure on prices in the coming weeks and months.
Even though the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) announced production increases in recent weeks, traders saw little immediate benefit because many barrels still cannot move efficiently through the Gulf region.
By Adedapo Adesanya
Nigeria received its first credit rating upgrade since 2012 from S&P Global Ratings, driven by improved oil market conditions and the country’s growing ability to refine and export crude locally.
The credit ratings agency upgraded the country’s rating by one notch to B, five levels below investment grade, according to a statement on Friday.
It raised its long-term foreign and local currency sovereign credit ratings on Nigeria to ‘B’ from ‘B-‘ and affirmed its ‘B’ short-term ratings. It also raised its long- and short-term Nigeria national scale ratings on the sovereign to ‘ngA+/ngA-1’ from ‘ngBBB+/ngA-2’.
S&P also cited Nigeria’s decision to liberalise the exchange rate as crucial to the development, and changed the outlook to stable.
The decision also comes as the federal government ruled out the reintroduction of subsidies on refined petroleum products, in order to avoid a return to larger budgetary deficits and drains on foreign currency (FX) liquidity.
S&P projected the general government deficit will widen to over 4 per cent of GDP on average during 2026 and 2027, a year of a general election.
It added that the implementation of reforms to broaden the tax base from very narrow levels is underpinning a steady decline in Nigeria’s debt-to-revenue ratio to 338 per cent in 2026 versus 500 per cent in 2023.
The agency said it could raise ratings over the next two years if fiscal outcomes improve significantly, either due to fiscal consolidation or structurally higher revenue, resulting in lower debt service costs.
It, however, warned that it could also lower the ratings if the implementation of Nigeria’s reform programme, particularly the series of critical steps taken to liberalise the exchange rate in 2023, reverses.
On the oil production forecast, S&P expects 2026 production to average approximately 1.66 million barrels per day, including condensates.
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