Hot Updates and Education Portal: oil

ANGRY youths of Udu , Udu Local Government Area in Delta State, have given the state government a seven-day ultimatum to address alleged marginalization of the area in the reconstitution of the board of the Delta State Oil Producing Areas Development Commission, DESOPADEC, or they would shut down oil wells in their location.They said the state government has not appointed any Udu indigene as commissioner or head of department in the oil commission since establishment, whereas Ughelli South and Uvwie in the same bloc have served on the board with Ughelli South re-appointed when Udu has not taken a bite. The union made the challenge in a letter dated September 1, to the Governor, Ifeanyi Okowa, signed by the chairman, Comrade Sunday Subi.Their words, “We hereby issue a seven-day ultimatum to the state government to wade into this matter and reverse this ugly trend in the interest of equity, peace and justice. The hallmark of the present administration is prosperity for all Deltans and not prosperity for a section of the state.”

“In the face of the unprovoked marginalization of the Udu people in matters relating to DESOPADEC, we the Udu people, particularly the youths who, hitherto, have conducted ourselves in the most dignifying and law abiding manner have clearly realized that our simplicity is being mistaken for cowardice. We may have to pick up the gauntlet to prove to all and sundry that we are no fools, to rescue Udu from this wantonly wicked marginalization.”

They asserted, “We, therefore, use this medium to call on your good self to reverse this trend, otherwise, we the good people of Udu and indeed the youths shall resort to self help by shutting down all oil wells and installations in Udu as a first step to register our grievances.”

The group warned, “This may be our last communication with you and the government of Delta state on the above subject matter except our request is acceded to within the shortest possible time. We refuse to be second- class citizen in any guise, just as we reject the yoke of hewers of wood and fetchers of water for others in Delta state.”

Udu People gives DESOPADEC 7 days to address alleged marginalization.

ANGRY youths of Udu , Udu Local Government Area in Delta State, have given the state government a seven-day ultimatum to address alleged mar...

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More doom and trouble lie ahead for The Nigeria’s economy, as oil 
price crashed even lower at the weekend, thereby threatening the 2015 
budget and fiscal plan. 
 
The international price of crude hit a six-year low below USD40 per 
barrel with West Texas Intermediate crude oil futures as low as 
USD39.89, while Brent crude declined further to USD45.10 from previous 
week’s level of USD48.87 per barrel. Nigeria’s sweet crude is similar to
 the Brent. 
 
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It is envisaged that prices will crash even further once Iran begins to 
enyoy its international pardon by pumping more oil into the already 
saturated market. 
 
This will spell more doom for Nigeria, which is producing less than its 
projected 2 million barrels daily, thereby increasing the cash crunch 
and liquidity flow in the economy, with many states still unable to pay. 
 
The steep decline in oil prices had in March this year forced the 
National Assembly to settle for USD53 per barrel as the oil benchmark 
price for 2015 budget, down from USD65 earlier proposed by the Federal 
Executive Council under ex-president Goodluck Jonathan. The government 
had earlier in the year effected downward review of the budget benchmark
 twice in response to sliding oil price from USD78 to USD73 and later to
 USD65. It even said it had planned for possible price fall scenarios of
 up to $50/barrel. 
 
With this development, economists are expecting further downwards 
adjustments in the budgetary benchmark, revenue projections and 
ultimately expenditure provisions. Also, they expect further pressure on
 the value of Naira as the development has wiped off any accretion to 
the country’s Excess Crude Account. 
 
According to the Global Chief Economist, Renaissance Capital, Mr. 
Charles Robertson, lower oil price will be painful for the budget. It 
means less money is available for much-needed investment in 
infrastructure. 
 
Budget projections 
 
The 2015 budget had envisaged federal government’s share to be about 
N3.6 trillion of total oil component revenue at USD65 per barrel, with 
estimated production output of 2million barrels per day. 
 
At current oil price, the component accruable to the federal government 
would drop massively to less than N2.5 trillion, putting the entire 
budget in disarray. Evidently all the projected expenditure, Vanguard 
learnt, are already being curtailed in the recurrent expenditure 
provisions in the budget, while capital expenditure of N634 billion is 
completely dropped. 
 
An economist with the Central Bank of Nigeria (CBN) told Vanguard that 
federal government may have abandoned the 2015 budget entirely and is 
now focusing on ordering the economy for 2016 budget and fiscal policy. 
He added, however, that in the interim, the apex bank would be battling 
with the external reserves and exchange rate pressures as a result of 
this development in the international oil market. 
 
Analysing the current pressures on CBN over the external reserves and 
plunging oil revenue, economists at FSDH Merchant Bank, said: “Although 
the CBN may keep to its current exchange rate position, we believe that 
with the huge demand pressure in the foreign exchange market in the face
 of the declining oil price and unsold oil production, we are inclined 
to maintain our forecast exchange rates,” which is about N216/ USD1.00 
in the official CBN window by next month. 
 
The oil revenue situation appears more compounded as Nigeria’s ability 
to produce and availability of buyers have been on the negative since 
this year. According to OPEC, the Nigerian National Petroleum 
Corporation (NNPC) cut its July official selling price for Bonny light 
and Qua Ibo to 10-year lows relative to North Sea Brent, as an overhang 
of 15mb July cargoes were unsold. The OPEC added that loading delays 
also hurt certain Nigerian grades as refiners looked for more reliable 
alternatives. 
 
Moreover, West African crudes were undermined by excess supply and 
relatively high freight rates for their cargoes making cheap North Sea 
and Mediterranean grades more attractive to some European buyers. 
 
Market glut 
 
The Managing Director, International Energy Services, Dr. Diran Fawibe, 
noted that the US market and parts of Europe are no longer Nigeria’s 
prime markets since the advent of the Shale oil, while the Arab 
producers have a better comparative advantage over Nigeria because of 
their nearness to the market. 
 
He noted that what is happening at the international oil market is 
beyond government’s control, which is further exacerbated by the refusal
 of the Organisation of the Petroleum Exporting Countries, OPEC, to 
which Nigeria also belongs, to cut down its production quota. 
 
OPEC is unwilling to cut back production as it would have done in the 
past to shore up prices because of shale oil, thus resulting to the 
current glut in the market and continuous price falls. 
 
Agreeing that Iran’s entry has again changed the market dynamic, the 
Chief Executive Officer, Oildata Energy Group, Mr. Emeka Ene, said 
offering discounts will compound Nigeria’s problems, since it is a 
mono-product oil economy. 
 
Instead, he urged government to initiate longer term strategies such as 
the formation of alliances with other producer nations, like Venezuela. 
 
He said: “We (Nigeria) need to think out of the box, and if we plan 
well, we can blend Nigeria’s light crude with Venezuela’s heavy crude to
 make it more friendly to the refineries.” 
 
According to him, the reason government is finding the price falls very 
challenging is because oil has over the years been seen as an export 
commodity, rather than an investment product. 
 
“The time to invest in higher field activities is when oil prices are 
down not when they are high. But we are unable to this this because 
there is no money for such investments,” he added. 
 
The slide toward USD40 per barrel gained momentum earlier last week 
after the US Energy Information Administration reported a 
larger-than-expected build in crude inventories previous week. 
 
This added to signs that the oil market remains oversupplied, with 
unequal demand, as the 12-member OPEC continues to pump at an 
unrelenting pace. The group’s latest monthly report showed that its 
output surged to a three-year high in July, boosted by Saudi Arabia, 
Iraq, Angola, and Iran. More Iranian oil is expected on the market with 
lifting of economic sanctions. 
 
Oil is now headed for its longest weekly losing streak since 1986, 
according to Bloomberg. Oil is in a bear market, and prices are down 
nearly 35% from recent highs. 
 
Friday’s drop comes amid a bigger sell-off in global markets. The major 
averages are seeing their sharpest weekly loss of the year, and the Dow 
lost more than 350 points during Friday’s session.