Norway’s example shows lessons for Nigeria’s weak performing oil, gas sector

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Norway, a leading country in global oil and gas technology and production, has offered huge lessons on the kind of regulatory reforms Nigeria needs to pursue to ensure it maintains competitive ‎edge in the global dynamic oil market.
Nigeria’s oil sector, the main driver of the economy, has failed to lift millions of Nigerians out of poverty within over 50 years of oil exploration in Nigeria’s oil rich Niger Delta, due largely to poor sectoral reforms and weak governance in the sector.

This could have been solved by the Petroleum Industry Governance Bill (PIGB), and had inadvertently shifted investors’ interest into other African countries that had just discovered oil.
Norwegian Ambassador to Nigeria, Jens Petter Kjemprud, says at the ongoing Nigeria’s Oil and Gas Conference in Abuja that Nigeria’s leadership could lift so many people out of poverty if the Nigeria oil sector operates with a better governance framework, while advising it to gradually evolve policies to ensure Nigeria plays its role as the world gradually goes into clean energy production.

The Ambassador notes, “Norway is a leading country in gas and oil technology and production. Governance in the sector shows that petroleum belongs to the people, and everyone has a stake. Norway, therefore, has a transparent and democratic system and enabling laws that enable steady and predictable development in the oil sector.
“Instead of putting so much money in developing the domestic oil company, we have decided to set up a special funding that brings in some income in oil and gas production through high yielding stocks and shares in global firms.”

According to the ambassador, “Based on series of reform that we have embarked upon, we have about biggest investments in the sovereign wealth globally, and we also have about $100 million worth … Read More...

Nigeria faces mixed oil market outcomes as Sino-U.S. trade war intensifies

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Concerns that the rising Sino-U.S. trade quarrel could slow the global economy and that U.S. sanction on OPEC members, Iran and Venezuela will further tighten the oil market presents Nigeria with mixed fortunes.

Slower global economic growth as a fallout from the trade dispute between China and the United States of America means less demand for oil, because oil demand is a function of economic activities. Less demand for oil implies oil prices will start falling, which is some bad news for Nigeria. But a tightened oil market will further shore up prices, good news for Nigeria’s economy managers.

Brent crude oil futures were at $71.12 per barrel at 0710 GMT, 12 cents, or 0.2 percent, below their last close. U.S. West Texas Intermediate (WTI) crude futures were at $62.30 per barrel, 5 cents above their last settlement.

Nigeria, Africa’s biggest crude producer is exposed either way to whatever happens at the international oil market because its economy is still heavily dependent on its petroleum sector. Oil still makes up 90 percent of foreign exchange and 80 percent of government revenue but contributes less than 10 percent of gross domestic product.

“It is time to take out fuel subsidies and put a proper stabilisation mechanism in place as buffer. Nigeria’s revenue this year is going to fluctuate, given these two major factors in the global oil market” said Oyindamola Adedokun, outcome lead, revenue stream at FOSTER, an Oxford Policy Management programme. “We are just barely out of a recession and if nothing is done to fix the petroleum sector, Venezuela may be our destination.”

Maritime consultancy and shipbuilding Tanker brokerage Eastport said in a note that “worsening trade friction between Washington and Beijing poses a downside risk to our forecasts” for petroleum products.

The U.S. … Read More...