• Marketers sourcing forex for import at N313/$, says NNPC source
Chineme Okafor in Abuja
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has said Nigeria could end the year averaging a daily crude oil production of 2 million barrels per day (mbpd) from her oil fields, if the ceasefire on production disruptions declared by militants in the Niger Delta region is sustained.
Kachikwu said so far the ceasefire has enabled production from oil fields in the region to come up to 1.75mbpd, he added that this however is expected to rise to 1.8mbpd by October and then 2mbpd by December.
He stated these in a presentation made at the recent presidential quarterly business meeting with private sector stakeholders in Abuja. Though he was reportedly represented by his Senior Technical Adviser, Johnson Awoyemi, a copy of his presentation was made available to THISDAY.
Until a recent ceasefire on production disruption was reportedly extracted from the militants by traditional rulers and other stakeholders in the Niger Delta, Nigeria’s oil output had consistently dropped, allowing Angola to overtake it as Africa’s top oil producer.
The drop also created some shortfalls in the country’s revenue projections in its 2016 national budget. Kachikwu however said at the meeting that given the country’s budget production target of 2.2mbpd, its production was still about 29 per cent short of expectation.
He said this gap would have to be closed quickly for Nigeria to be able to meet the targets in the budget, adding that while the ceasefire offered such opportunity, stakeholders in the country have to ensure that it is maintained.
The minister also said the crisis in the Niger Delta had shut in about 2.5 billion cubic feet of gas per day (bcf/d) from being produced. He said about 60 per cent of gas (850 million scuf/d) that should go to the country’s power sector has also being shut in.
“It is a developing situation and not just one element that impact the market place- you have Platt and the forex rate. What we have had in the past few months and up to this week is typical and fluctuates but largely we have been lucky that Platt has cushioned the effects of forex and deterioration in the value of naira against the dollar,” he added.
Meanwhile, a highly placed source in the Nigerian National Petroleum Corporation (NNPC) has told THISDAY that oil marketers who import petrol into the country are still being protected from the vagaries of the naira/dollar exchange rates by the Central Bank of Nigeria (CBN) and International Oil Companies (IOCs).
The source was responding to the paper’s enquiries on the downstream market’s current fundamentals given that the Petroleum Products Pricing and Regulatory Agency (PPPRA) had last updated its pricing template in May while the exchange rate has continued to fluctuate.
He explained that oil marketers who import products do that with the support of the CBN and IOCs, and that they get forex at the official interbank rate of N310-313 to a dollar, and that there was no government subsidy as assumed. “If FX is going up and Platt is coming down, (Platt is international cargo price), then there is an offset and ultimately, we are still within the N145 band and marketers do not have a reason to go for a higher price.
“Of course, we also look at two markets – Rotterdam which is basis for pricing international cargos in Europe and European cargoes coming to Africa, and then West Africa Lome, which is a small market but have for several reasons kept a lower price than Portugal.
“Depending on where you are sourcing your products from, the combination of lower cargo price and associated costs has kept it within the band. The essence of the band in the first place is to accommodate such fluctuations, which is why when you drive around, you see different prices depending on marketers’ appetite for margins,” he said.
According to him, “That band of N135-145 was built at a time forex was around N280-320 a dollar, and they continue to source forex at that rate. We still have the IOCs and supported by the Central Bank, so the forex that oil marketers get is not at the black market rate but at more or less the interbank rates which is usually N313, N310 to a dollar.”
When asked what the minister and marketers agreed on the last time they met in Abuja, he said: “The only thing that continues to be a challenge is the FX and that is down to the Niger Delta issue because if we can sell more and bring more dollars into the country, the better for us.
“We have a responsibility to continue to ensure that there are improvements in the business environment for the operators, because it is when there are unfavourable circumstances that they may be tempted to take the short cut. Together with the CBN and PPPRA, we are working out ways to continue to do these things.”