Nigeria’s H1 2023 foreign trade data raises questions about economic balance

In the first half of 2023, Nigeria engaged in trade amounting to N24.79 trillion in goods and services with global partners, resulting in a N2.2 trillion trade surplus, as reported by the National Bureau of Statistics (NBS). While these figures indicate a -12.68% decline compared to the N28.39 trillion traded in the same period of 2022, they also signify a significant +258% year-on-year (Y-o-Y) increase in trade surplus, highlighting a potential enhancement in Nigeria’s international net trade. Total imports for H1 2023 amounted to N11 trillion, with total exports reaching N13.50 trillion, contributing N2.2 trillion to the country’s foreign exchange earnings. The data reveals that crude oil remains Nigeria’s dominant export product for H1 2023, constituting approximately 79.50% of exports, while other oil products make up 10.57%, manufacturing 2.54%, and agriculture 4.15%. This suggests that despite reduced crude oil production, oil still heavily influences the nation’s exports, indicating a lack of comparative advantage in non-oil products. In contrast, Nigeria’s imports for H1 2023 predominantly comprised manufactured products at 47.99%, oil products at 33.17%, agriculture at 8.21%, and raw materials at 9.95%. Analysts believe that due to substantial domestic productivity gaps, reliance on imported fuel is likely to continue undermining the country’s foreign exchange position. A breakdown of trading partners reveals that Nigeria’s largest trading partners are Europe (46% of total exports) and Asia (25%), while intra-African trade accounts for a modest 19%. Likewise, Nigeria’s primary sources of imports are Asia (42%) and Europe (38%), with other African nations contributing 15% to imports. The relatively limited trade relations with other African countries in favor of India (Asia), the Netherlands (Europe), and the United States (America) may restrict Nigeria’s ability to maximize the benefits of the African Continental Free Trade Agreement (AfCFTA). *Culled from Proshare

Crude oil flies to $86bpd over Gabon coup concerns

The coup in Gabon has fueled a modest increase in the prices of crude oil due to threats to the country’s 200,000 barrels per day (bpd) of crude oil exports.  Gabon is the second-smallest OPEC producer. Earlier on August 30, a cohort of senior military officers declared that they had assumed control following the announcement by the state election body that President Ali Bongo had secured a third term. Bongo’s father Omar had ruled as president for 42 years. According to a report by Wall Street Journal, since Gabon’s coup announcement, global crude oil prices have seen a modest increase due to seeming threats to exports from the country. “The coup and the threat of disruptions to Gabon’s oil exports are supporting oil prices, but only modestly as the nation is a minor OPEC oil producer, DNB Markets analyst Helge Andre Martinsen says. Brent crude oil is up 0.3 per cent at $85.19 a barrel. “The nation’s output stands at a modest 190,000 barrels a day, but it has been the only African OPEC member to hit its production quotas. So far, there has been no sign of disruption to Gabon’s oil output. Still, the coup serves as a reminder of the geopolitical risk in the oil market, Martinsen says.” It is important to note that as of 12:50 PM (GMT+1) on Wednesday, August 30, Brent crude price was at $86 per barrel. The Gabon coup is raising supply concerns alongside Hurricane Idalia in the United States, which has raised oil supply concerns as well. Meanwhile, on Wednesday, Amena Bakr, OPEC’s chief correspondent posted on Twitter that so far, it appears that oil production from fields in Gabon is not affected by the military coup. Similarly, Assala Energy, which is wholly owned by Carlyle Group (CG.O), said its oil production in Gabon has been unaffected by the military coup in the country. “We can confirm that all our personnel are safe, our operations continue as usual and our production is not affected,” a company spokesperson said. The private equity fund’s non-U.S. energy arm first invested in Assala in 2017 when it acquired Shell’s (SHELL) ageing operations in Gabon for $628 million. However, earlier this month, Carlyle agreed to sell Assala to French producer Maurel & Prom which owns and operates oil and gas assets in Africa, Europe and Latin America, including three licences in Gabon, for $730 million.

Crude production plunges to 1.22mbpd in Q2 2023 -Report

Hope for increased crude oil production deemed with second quarter figures plunging to 1.22 million barrel per day (mbpd), Nigeria’s statistics bureau, has said. The decrease is coming in spite of the restoration of fragile peace in the Nigeria Delta region; the second quarter of 2023 recorded an average daily oil production of 1.22 million barrels per day (mbpd). This according to the Nigerian Bureau of Statistics (NBS) was much lower than the daily average production of 1.43mbpd recorded in the same quarter of 2022 by 0.22mbpd and lower than the first quarter of 2023 production volume of 1.51 mbpd by 0.29mbpd. The real growth of the oil sector was 13.43 per cent (year-on-year) in the second quarter of 2023, indicating a decrease of 1.66 per cent points relative to the rate recorded in the corresponding quarter of 2022 (-11.77 per cent). Growth also decreased by 9.22 per cent points when compared to the first quarter of 2023 which was –4.21 per cent. On a quarter-on-quarter basis, the oil sector recorded a growth rate of -14.12 per cent in the second quarter of 2023 and contributed 5.34 per cent to the total real Gross Domestic Product (GDP) in the second quarter of 2023, down from the figure recorded in the corresponding period of 2022 and down from the preceding quarter, where it contributed 6.33 per cent and 6.21 per cent respectively. The statistics bureau further said the non-oil sector grew by 3.58 per cent in real terms during the reference quarter (Q2 2023). This rate was lower by 1.19 per cent points compared to the rate recorded in the same quarter of 2022 and 0.81 per cent.

Local refiners got 3.6m barrels of crude in 2 years – NUPRC  

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said it delivered 3,614,936 barrels of crude to three local refineries between September 2021 and May 2023. According to the regulator in a statement Thursday in Abuja, only local refiners that complied with relevant requirements of Section 109 of the Petroleum Industry Act, 2021 are entitled to crude supply. NUPRC said the clarification became necessary due to insinuations from some operators that it had failed to supply them with crude oil. The Commission said, between January 2019 and August 2021 the period before the PIA came into effect, 1,726,049 barrels of oil were supplied to two refineries that met the requirements of the law at the time. The two refineries are operated by Walter Smith and NDPR. The post-PIA supplies were made to Walter Smith, NDPR, and OPAC refineries. It stated that the Commission recently granted approval for Millennium Oil and Gas Limited to supply by trucking 60,000 barrels of crude oil at the rate of 20,000 barrels per month for three months to OPAC and Duport refineries in Edo State. In addition, alternate evacuation routes such as trucking of crude oil to refineries have been approved to forestall potential downtime during refinery operations which might arise due to non-availability or vandalism of pipelines. It was emphatic that the Commission remains steadfast in delivering on the mandate stipulated by the PIA and will not relent in ensuring that a conducive and suitable supply of feedstock to all licensed refineries operating within the country is sustained. It further stated that any refinery operator or group of refinery operators in Nigeria not receiving or claiming not to be receiving feedstock from appropriate agencies are yet to satisfy the mandatory requirements as stipulated by law. It pointed to the fact that the Commission has provided regulatory support for qualified refineries by ensuring adequate crude oil supply. It restated its commitment to transparency and determination to work within the provisions of the PIA; which is why data concerning its operations with industry operators are always made available for public scrutiny. “The NUPRC wishes to state the facts to provide insight and clarity to the general public as follows: Section 109 of the Petroleum Industry Act (PIA) 2021 mandates that the Domestic Crude Supply Obligation (DCSO) be placed on all holders of Petroleum Mining Leases and Oil Mining Leases in Nigeria in a bid to ensure crude oil supply to local refineries. Under Section 109(2) of the Petroleum Industry Act, the Commission gazetted the Production Curtailment and Domestic Crude Oil Supply Obligation Regulations which provides clarity on the obligations of the stakeholders of the domestic crude oil supply value chain. “The PIA prescribes its implementation mechanism requiring the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) to furnish the Commission with domestic crude requirements of licensed operating refineries on an annual basis which would form the basis for the Commission to issue the crude supply obligation on the producing companies in the upstream sector. It also mandates the requirement for the transaction to be on an arm-length commercial basis between the producer/supplier and the refiner. “The Commission has provided an enabling framework for the supply of crude oil to be negotiated between the lessee and the oil refining licensee, having regard to the prevailing international market price for similar grades of crude oil as stipulated in section 4 (7) (b) of the Domestic Crude Supply Obligation (DCSO) regulations in either the Nigerian Naira or the United States Dollar or a combination for flexibility to be agreed by the parties. “Consequently, the Commission placed priority on developing this regulation for the operationalization of the mandate and developed the regulation to ensure the availability of a regulatory framework for DCSO.

Current oil output unlikely to change as OPEC meets Friday

The Organization of Petroleum Exporting Countries (OPEC) is not likely going to make any changes to the current oil output policy as tighter supplies and resilient demand drive an oil price rally. Ministers from the OPEC and allies led by Russia, known as OPEC+, meet on August 4 and the panel, called the Joint Ministerial Monitoring Committee, can call for a full OPEC meeting if warranted. Oil has rallied to a three-month high this week above $85 a barrel for Brent crude, as tighter supply and rising demand outweigh concern that interest rate hikes and stubborn inflation could hit economic growth.The Six OPEC+ sources said the Committee would probably not make any changes to existing policy during Friday’s online meeting as one of them cited the rising oil price as a reason to take no action.The OPEC and the Saudi Energy Ministry did not immediately respond to requests for comment on Tuesday.In the latest comments from an OPEC member about the market, the energy minister for the United Arab Emirates told Reuters on July 21 that current OPEC+ actions were sufficient for now and the group was “only a phone call away” if any further steps are needed. The UAE minister sits on the JMMC, which is chaired by Saudi Energy Minister Prince Abdulaziz bin Salman. Still, a surprise cannot be ruled out. The Saudi minister in July said OPEC+ would “continue the effort at surprising markets”. In April, several OPEC+ members announced cuts just ahead of a JMMC meeting that was expected to take no action. At its last policy meeting in June, OPEC+ agreed on a broad deal to limit supply into 2024 and Saudi Arabia pledged a voluntary production cut for July that it has since extended to include August. Analysts told Reuters last week they expected Saudi Arabia to extend the voluntary cut for another month to include September. National Australia Bank said in a report on Tuesday that it expected the Saudis to announce an extension of their voluntary cut at the committee meeting on Friday.

ExxonMobil announces Shane Harris new Nigeria Chairman/MD

ExxonMobil has announced Mr. Shane Harris as the new Chairman and Managing Director in the country. Mr Ogechukwu Udeagha, the Manager, Media and Communications of ExxonMobil, announce this in a statement made available to newsmen in Eket on Monday. He said that Harris was to assume the role of lead country manager for ExxonMobil’s three affiliates in Nigeria due to Richard Laing’s retirement. “ExxonMobil has appointed Mr Shane Harris as chairman and managing director, and lead country manager of its three affiliates in Nigeria. “The three affiliates include: Mobil Producing Nigeria Unlimited, Esso Exploration and Production Nigeria Limited, and Esso Exploration and Production Nigeria (Offshore East),” he said. Udeagha said that Harris succeeds Laing, who is retiring from the company after 33 years of service, effective July 1. Harris, prior to his appointment, was the chairman and president of ExxonMobil Exploration and Production, Malaysia Incorporated. “It is a privilege to lead the ExxonMobil team in Nigeria and build on the work that Richard Laing has done over the last three years. “I look forward to the work that lies ahead and continuing the company’s outstanding relationships,” he said. Since joining ExxonMobil in 1998, Harris has held a variety of leadership, engineering and business assignments in Australia, Canada, Malaysia, Russia and the United States.  “In two of these previous assignments, he served as asset manager for Imperial Oil’s Kearl oil sands mining asset in northern Alberta, Canada, and as ExxonMobil’s global drilling technical manager in Houston,” Udeagha said. He said that Harris is Australian and holds a bachelor’s degree in mechanical engineering from the University of Newcastle, Australia.