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Nigeria’s oil output hits seven-month high, now 1.18 million barrels per day

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Nigeria’s crude oil production rose to 1.185 million barrels per day in November 2022, representing the highest output by the country in the past seven months.

Latest oil production figures obtained from the Nigerian Upstream Petroleum Regulatory Commission on Sunday showed that the country’s output increased by 171,119 barrels per day in November when compared to what was recorded in the preceding month.

This came as the Organisation of Petroleum Exporting Countries (OPEC) announced on Sunday that the Document of Cooperation between the cartel and non-OPEC members had stabilised the oil market.

Data sourced by our correspondent from the upstream regulator indicated Nigeria’s crude oil production in October 2022 was 1.014m barrels per day, but this moved up to 1.186mbpd in November.

The last time Nigeria’s crude oil production crossed this figure was in April 2022 when the country pumped 1.219mbpd of crude, outside blended and unblended condensates.

Further analysis of data from the regulator showed that the country’s crude oil output in May, June, July, August and September was 1,024,317bpd; 1,158,274bpd; 1,083,899bpd; 972,394bpd, and 937,766bpd respectively.

Nigeria’s oil production had been crashing since 2021 following massive oil theft in the Niger Delta region, a development that denied the country billions of dollars in revenue.

However, in the past few months, the Federal Government has intensified efforts to check the menace of oil theft. The Nigerian National Petroleum Company Limited, in partnership with security agencies and private contractors, has deployed measures to tackle the challenge.

These measures seem to be paying off, as oil production increased consecutively in the months of October and November 2022.

On the stability of the global oil market, OPEC Secretary-General, Haitham Al Ghais, said in a statement that the Declaration of Cooperation by the cartel and its allies had been on for six years, noting that it had also helped in securing global energy security.

The DoC, which was signed by 23 oil producing countries, aims to secure sustainable oil market stability through cooperation and dialogue for the benefit of all producers, consumers and investors.

Al Ghais said, “The Declaration of Cooperation is an unprecedented collaborative framework of 23 oil-producing countries that is based on trust, mutual respect and dialogue.

“Six years later, the framework continues to play an instrumental role in supporting market stability, which is essential for growth and development, as well as attracting the necessary investment to ensure energy security.”

He noted that the commitment of the DoC participants to a stable oil market was once again evident, following the severe oil market contraction caused by the COVID-19 pandemic.

On December 10, 2016, OPEC member countries and Azerbaijan; the Kingdom of Bahrain; Brunei; Darussalam; Equatorial Guinea, which later joined OPEC; Kazakhstan; Malaysia; Mexico; Sultanate of Oman; Russian Federation; Republic of Sudan; and Republic of South Sudan, met at the OPEC headquarters in Vienna.

They decided to establish the DoC as a platform for cooperation and dialogue in the interest of oil market stability. Other producers attended the meeting in support of these extraordinary efforts.

World Bank says debt servicing will take 123% of 2023 revenue

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The World Bank has projected that debt servicing will gulp 123.4 per cent of the Federal Government’s revenue in 2023.

This was according to a presentation made by the new World Bank Lead Economist for Nigeria, Alex Sienaert, in November 2022.

The document was entitled, ‘Nigeria Public Finance Review: Fiscal Adjustment for Better and Sustainable Development Results.’

The document projected that debt servicing would gulp 100.2 per cent of Federal Government revenue by the end of 2022.

This was a decline from the earlier projection in its October Africa’s Pulse report, which is a biannual analysis of the near-term macroeconomic outlook for the region, published during the World Bank/IMF Spring and Annual Meetings in April and October.

In the Africa’s Pulse report, the Washington-based bank had said that Nigeria’s debt service to revenue ratio could stand at 102.3 per cent by the end of 2022.

It had described the public debt in Nigeria as concerning due to the rising debt service-to-revenue ratio.

However, the situation would be dire in 2023 as debt surviving would exceed 118 per cent of revenue reported in the first four months of 2022.

In his presentation document, the World Bank lead economist for Nigeria noted that borrowing more money was not the solution for Nigeria.

The document read, “Borrowing more is not the solution: debt costs are rising rapidly, squeezing non-interest spending.

“Debt servicing has surged over the past decade and is expected to continue increasing over the medium-term, crowding out productive spending.”

Economic Confidential recently reported that Nigeria’s public debt rose to N44.06tn in the third quarter of 2022, with the country struggling with a repayment burden.

According to a press statement published on the website of the Debt Management Office, the total public debt stock rose from N42.84tn recorded in the second quarter to N44.06tn in the third quarter of 2022.

This showed that there was a 2.85 per cent increase quarter-on-quarter, with Nigeria acquiring N1.22tn debt within three months.

The DMO said that the increase in public debt was due to new borrowings by the Federal Government to part-finance the deficit in the 2022 Appropriation Act, alongside new borrowings by sub-nationals.

It also noted that the total public debt stock consisted of domestic debt of N26.92tn and external debt of N17.15tn.

The World Bank recently said that Nigeria’s debt, which might be considered sustainable for now, was vulnerable and costly.

According to the Washington-based global financial institution, the country’s debt was also at risk of becoming unsustainable in the event of macro-fiscal shocks.

The bank had said, “Nigeria’s debt remains sustainable, albeit vulnerable and costly, especially due to large and growing financing from the Central Bank of Nigeria.

“While currently the debt stock of 27 per cent of the Gross Domestic Product is considered sustainable, any macro-fiscal shock can push debt to unsustainable levels.

“However, the debt to the GDP in Nigeria is rising quickly, and the total stock of debt in absolute value has almost doubled between 2016 and 2020, and without a policy change is expected to reach 40 per cent of the GDP by 2025.”

The bank further expressed concerns over the nation’s cost of debt servicing, which according to it, disrupted public investments and critical service delivery spending.

Speaking at the launch of the World Bank’s Nigeria Development Update titled, ‘The Urgency for Business Unusual,’ the Minister of Finance, Zainab Ahmed, had admitted that Nigeria was struggling to service its debt.

She said, “Already, we are struggling with being able to service debt because even though revenue is increasing, the expenditure has been increasing at a much higher rate, so it is a very difficult situation.”

A Professor of Development Macroeconomics at the University of Lagos, Prof Olufemi Saibu, criticised the government for over-borrowing.

He said, “I think we are over-borrowing. We continue to rely on international benchmarks which make us lazy in terms of revenue generation.”

Emefiele says non-oil exports are now close to $1bn

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The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, has expressed optimism that export proceeds repatriation for rebate will hit $1 billion by the fourth quarter of 2022.

Emefiele said this at a press conference on the outcome of the 13th annual Bankers’ Committee retreat in Lagos.

He said tremendous progress had been made in generating non-oil export revenue through the RT200 programme which started in February.

“During the six weeks in February and March when the programme started, rebates of N65 were given, export proceeds repatriation that earned rebate was about $62m. During the second quarter, export proceeds repatriation that earned rebate was about $622m, and in the third quarter we saw almost about $850m of export proceeds that earned rebate.

“This is not export proceeds that did not earn rebates. Let’s not forget the rebate is only meant for processed goods. So, by the time we add both processed and unprocessed goods like unprocessed cocoa and cashew, we actually ran into almost $1bn during the third quarter.

“And we are beginning to think that we should be able to continue to ramp up. We are looking hopefully in the fourth quarter, which we will be seeing in January, we hope that we should be able to hit over a billion dollars in export proceeds and repatriations that will qualify for rebate,’’ Emefiele said.

While recalling that earlier in the year the apex bank had threatened banks to source for foreign exchange (forex) to meet the needs of their customers and not entirely rely on CBN sources, he said the committee agreed that the apex bank should continue to sell forex to banks following the success of the RT200 initiative.

“But seeing the progress that has been made so far, we are talking about $62m plus $622m plus $850m, we are talking of almost $2bn,” he added.

Olukorede Adenowo

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Olukorede Adenowo (K.O) is Executive Director, Standard Chartered Bank Nigeria (SCBN) Ltd.

He is the Head of Global Banking for Nigeria, responsible for driving and implementing the bank’s business strategy for its Corporate and Institutional Clients.
He also currently serves as a Non-Executive Director on the Board of Standard Chartered Bank Gambia.

Prior to his appointment, he served as Chief Executive Officer for Standard Chartered Bank (SCB) The Gambia with dual responsibility for SCBs business in Senegal.
He has also been a Non-Executive Director of SCB Sierra Leone from 2014 to 2020.

K.O has a total of 33 years post-university experience in Banking, Finance and Consulting.

In his penultimate role as Africa Co-Head Financial Institutions and Public Sector business for SCB, K.O provided strong leadership in building and managing key strategic FI relationships across West Africa. He worked closely with several Banks and Governments across the region i.e. Cameroon, Gabon, Senegal, Ghana, and most recently Nigeria in advising them on accessing international capital markets and ultimately improving the banks visibility in Public Sector for business success and growth in an increasingly stringent regulatory environment.

He has served as Managing Director, Origination and Client Corporates for Standard Chartered Bank, West Africa 4, Deputy Managing Director of Standard Chartered Bank Cameroon and Director in Wholesale Bank in Standard Chartered Bank Nigeria.

He was appointed the first Regional Head of Global Corporates for Standard Chartered Africa where he led the Africa Multinational business. He was a founding staff of SCB Nigeria and has held other positions in Standard Chartered Bank Group in the last 20 years. He has worked in Société Générale Bank Nigeria and Deloitte Nigeria, where he qualified as a Chartered Accountant in 1990.

An Economist turned Chartered Accountant; he was appointed Fellow of the Institute of Chartered Institute Accountants of Nigeria in 2000.

He is an alumnus of INSEAD and Said Business School of Oxford University where he had management training in Leadership and holds an MBA from the Lagos Business School.

He is married to Olajumoke and they have two children.

Global Infrastructure Partners and ADIA Agree to Acquire 72.55% Interest in European Rail Logistics Company, VTG

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Global Infrastructure Partners ("GIP"), a leading independent global infrastructure investor, is pleased to announce it has reached an agreement, alongside our partner the Abu Dhabi Investment Authority ("ADIA"), to acquire a 72.55% equity interest in VTG Aktiengesellschaft ("VTG"), the leading European railcar lessor, from Morgan Stanley Infrastructure Partners and Joachim Herz Stiftung.

Headquartered in Hamburg, Germany, VTG is a leading international wagon hire and rail logistics company whose more than 88,500 railcars comprise the largest privately owned fleet in Europe. VTG’s diversified fleet and pan-European operations allow it to offer services to a wide range of customers across the industrial, logistics and railway undertaking sectors. The VTG platform provides a differentiated offering to its customers through ancillary capabilities, including rail logistics and repair and maintenance.

Adebayo Ogunlesi, Chairman and CEO of GIP said: "We are excited by this investment and the opportunity to leverage GIP’s deep industry expertise in the rail sector to build on a market-leading European transport infrastructure platform. This acquisition is aligned with GIP’s energy transition and decarbonisation strategy given significant government support for the European rail sector as one of the most cost-effective tools for delivering on net zero emissions targets. We look forward to partnering with ADIA to develop this unique platform."

Khadem AlRemeithi, Executive Director of the Infrastructure Department at ADIA, said: "The growth of Europe’s rail freight market is backed by a modal shift to rail as a key enabler of the decarbonisation of supply chains. This investment in VTG aligns with our continued focus on pursuing infrastructure opportunities backed by strong energy transition-related tailwinds. For this transaction we have worked hand-in-hand with GIP, a long-standing partner, to invest in a market leading business with an established track record."

The transaction is subject to customary regulatory closing conditions.

GIP is a leading independent infrastructure fund manager that makes equity and debt investments in infrastructure assets and businesses. GIP targets investments in the energy, transport, digital infrastructure, and water/waste sectors in both OECD and select emerging market countries. Headquartered in New York, GIP operates out of 10 offices: New York, London, Stamford (Connecticut), Sydney, Melbourne, Brisbane, Mumbai, Delhi, Singapore and Hong Kong. GIP manages c. US $84 billion for its investors. GIP’s portfolio companies have combined annual revenues of c. US $68 billion and employ c. 104,000 people.

Established in 1976, the Abu Dhabi Investment Authority ("ADIA") is a globally-diversified investment institution that prudently invests funds on behalf of the Government of Abu Dhabi through a strategy focused on long-term value creation.