Nigeria’s distributable revenue fell by 7.8 percent in November – Reuters

ABUJA Dec 16 (Reuters) – Nigeria’s distributable revenues to the government fell in November by 7.8 percent to 387 billion naira ($1.27 billion) as militant attacks shut down Niger Delta oil pipelines and cut earnings, the accountant general has said.

Nigeria, which has Africa’s biggest economy, is an OPEC member that relies on crude oil sales for two-thirds of government revenue. As a result, it has been hit hard by the fall in global crude prices since mid-2014. 

Militants have carried out attacks on oil and gas facilities in the southern Niger Delta energy hub since January, cutting oil production – which stood at 2.1 million barrels per day at the start of 2016 – by more than a third earlier this year.

The frequency of attacks has slowed in recent few months amid talks between the government and Delta community leaders to address the grievances of militants who want the oil hub to receive a greater share of the country’s energy wealth.

Repairs on damaged facilities are underway.

“Federation revenue was low as a result of shut-in and shut-down of pipelines for repairs and maintenance due to leakage and sabotage,” said Ahmed Idris, the accountant general, late on Thursday.

“The total revenue distributable… including VAT – 75.579 billion naira – is 386.852 billion naira,” he said.

He said the impact of repairs and maintenance were the reason for the fall from 420 billion naira in October. ($1 = 304.5000 naira) (Reporting by Camillus Eboh; Writing by Alexis Akwagyiram; Editing by Tom Heneghan)

 

    Nigeria sells more treasury bills after bond auction disappoints – Reuters

    LAGOS Dec 16 (Reuters) – Nigeria’s central bank sold more treasury bills than it offered at an auction this week, it said on Friday, to mop up liquidity after the debt office cut the size of a domestic bond sale in view of its high borrowing costs.

    The central bank raised 147.48 billion naira ($484 mln) at a treasury bill sale on Wednesday, higher than the 83.24 billion naira it originally advertised, and yields remained unchanged at the auction. 

    It sold three-month paper at 14 percent to raise 39 billion naira and offered 17.50 percent for six-month bills which fetched 23.02 billion naira. It paid 18.68 percent for the one-year bill worth 85.46 billion naira.

    On Wednesday, the debt office sold far less in bonds than it had offered as investors, worried about rising inflation in Africa’s largest economy, demanded higher yields from a government that is looking to spend its way out of recession.

    Total subscriptions at the treasury bill auction stood at 185.97 billion naira, up from 156.56 billion naira at the previous sale last month, data from the central bank showed.

    Nigeria’s central bank issues treasury bills regularly to help lenders manage their liquidity, curb rising inflation and provide naira to support the government fund its budget. ($1 = 304.50 naira) (Reporting by Oludare Mayowa; Editing by Chijioke Ohuocha and Hugh Lawson)

     

    Nigeria, set to benefit most from OPEC cut, struggles to cash in – Reuters

    * Unsold cargoes linger due to glut of light oil

    * U.S. oil more competitive after Brent’s OPEC boost 

    * Planned cuts are mostly to sour crude

    By Libby George

    LONDON, Dec 16 (Reuters) – Nigeria, one of two OPEC countries completely shielded from any cuts to its oil production, was in line for a windfall from the group’s agreement late last month to shore up the price of crude.

    Instead, the beleaguered West African nation is struggling to sell its rising oil production as higher benchmark prices slammed shut trade routes and did little to stem an excess of light, sweet oil, leaving millions of unsold barrels.

    The decision in November by the Organization of the Petroleum Exporting Countries to trim output sent benchmarks soaring; dated Brent is now more than 20 percent above mid-November lows. The price boost was good news for oil producers from Texas to Indonesia.

    Nigeria, which has been battling militant attacks in its oil-producing Delta region, got a reprieve from cuts along with Libya, which has been pumping at around a quarter of its capacity for much of this year due to its own political turmoil.

    But rather than a gold-lined gift, Nigeria’s oil is finding itself cut off from buyers; some 30 million barrels of it has yet to sell, with more loadings due within a week and output steadily rising.

    “They’ve just closed their shutters,” one trader said of potential buyers. “There’s no arbitrage,” the trader added, referencing potential trade routes to other regions.

    One catch is that the spike in dated Brent, the baseline on which Nigerian exports are priced, made U.S. barrels comparatively cheaper and more attractive.

    Because U.S. producers were not part of any cut, the discount of their West Texas Intermediate benchmark doubled relative to Brent CL-LCO1=R to $2.44 a barrel on Nov. 30, the day of the deal, and still stands at more than $2.

    This opened a flood of exports from the United States to Asian buyers who might otherwise take Nigerian oil, and boxed Nigerian oil out of its outlet at refineries on the U.S. East Coast.

    TIGHTER MARKET FOR SOUR

    The other issue is that because Nigeria and Libya are some of the only OPEC producers of “light” crude, nearly all of the cuts will come from “sour” crude, which though usually less valuable because of its higher sulphur is now in demand as buyers await a tighter market for it.

    “Buyers are loading as much sour (crude) as they can. The light sweet is not as interesting – there is a glut of it,” said Andrew Wilson, head of energy research with BRS Brokers.

    BRS Brokers said there were nearly 12 million barrels of light North Sea oil unsold in ships at the time of the OPEC deal. This whittled down to just under 3 million, but rising production of light crude from Libya, Kazakhstan and Russia means buyers have a suite of choices – and could steer clear of a country whose exports are still seen as unreliable.

    “If they start taking crude from Nigeria again, they’re not sure they’ll get it next month,” Wilson said.

    Still, even if they are forced to cut price differentials and wait longer to find buyers, Nigeria stands to make some $9 million more for each exported cargo following the deal, which is no small salve to a country battling an economic crisis.

    “They’re getting some benefit from the higher flat price,” said Olivier Jakob, managing director of PetroMatrix. The slow sales, he said, “show the need for those cuts – the oil needs to move”.

    “If they are respected, the physical impact would be later. It will take some time.” (Reporting by Libby George; Editing by Dale Hudson)

     

    UPDATE 1-Nigeria famine risk rising, those in danger may double in 2017 – IPC – Reuters

    (Adds quote, background, detail)

    GENEVA Dec 16 (Reuters) – Global food security monitors said on Friday that Nigeria’s Borno state was at increased risk of famine, with one study projecting the number of those affected will rise to 115,000 in 2017 from 55,000 this year. 

    The northeastern state is the area worst hit by the seven-year Boko Haram insurgency that has killed 15,000 people and uprooted more than 2 million during the Islamist militants’ attempt to create a “caliphate” in the area.

    The Integrated Food Security Phase Classification (IPC), which is backed by U.N. and other aid agencies, issued a special alert calling for urgent humanitarian action.

    “There is an elevated likelihood that famine is ongoing and will continue in the inaccessible areas of Borno State assuming conditions will remain similar or worse to those observed in Bama and Banki towns from April to August of 2016,” it said.

    “The current response is insufficient to meet the very large emergency assistance needs.”

    People displaced by conflict are worst affected, it said, adding that low crop production, disrupted livelihoods and financial crisis were also to blame.

    Nigerian military forces backed by troops from neighbouring states have in recent months ousted Boko Haram from most of an area the size of Belgium that they controlled until early 2015, revealing thousands living in famine-like conditions.

    The U.S.-based Famine Early Warning Systems Network (FEWS NET) has said at least 2,000 people may have died of famine in the region this year, and the United Nations has said 75,000 children could starve to death over the next few months if they do not receive humanitarian assistance.

    The IPC cited a report by the U.N.-backed Cadre Harmonise, a regional food security partnership that found 115,000 people in Borno state and more than 5,000 in Yobe state would be at risk from famine in the second half of 2017.

    The FEWS NET study had confirmed the alarming situation and revealed an ongoing elevated risk of famine that was likely to continue into 2017, the IPC statement said. (Reporting by Tom Miles; Editing by Tom Heneghan)

     

    Nigeria interbank lending rate eases on budget cash injections – Reuters

    LAGOS Dec 16 (Reuters) – Nigeria’s overnight lending rate fell this week to around 3 percent on Friday from an average of 3.9 percent a week ago on expectations that budget cash will be injected into the banking system on Friday or Monday, traders said.

    Nigeria, an OPEC member and Africa’s biggest economy, relies on crude oil sales for two-thirds of national income. All government revenue is shared among the country’s federal, state and local governments each month. 

    On Thursday Nigeria distributed 387 billion naira ($1.27 billion) revenue, among the three tiers of government. A portion belonging to state and local governments is passed through the banking system.

    “Interbank rates are priced at 3 percent on the expectation that the budget allocation will be credited to the system on Friday or latest by Monday,” one senior currency dealer said.

    Though Nigeria raised 147.48 billion naira ($484.33 million) worth of treasury bills and 69.2 billion naira in bonds maturing in five, 10 and 20 years’ time at auctions on Wednesday, the market remains liquid enough to support the prevailing rate, traders said.

    Traders said the cost of borrowing among commercial lenders should stay flat in the coming days as banking activities slow ahead of the festive season and the year-end closure of financial year. ($1 = 304.50 naira) (Reporting by Oludare Mayowa; Editing by Alexis Akwagyiram/Mark Heinrich)

     

    Dollar Surges as U.S. Prepares for Higher Rates – WSJ

    Dollar touches a 14-year high after Fed raises interest rates for the first time in 2016

    A dollar surge that began after the U.S. election has accelerated with this week’s Federal Reserve interest-rate increase, pointing to a possible reckoning in coming months for economies around the globe.

    The WSJ Dollar Index of the dollar’s value against 16 major trading partners hit a 14-year high Thursday, reflecting expectations that the Fed will pick up the pace of rate increases next year as the U.S. economy gains momentum.

    A sharp increase in the dollar stands to have long-lived economic consequences, potentially hampering a U.S. earnings recovery and making the trillions in dollar-denominated debt around the world more expensive to pay back.

    But the dollar’s renaissance this year already is rippling through global financial markets, sending currencies from Japan and India to Turkey and Brazil tumbling and presenting companies, consumers and governments in those nations with a list of increasingly difficult choices.

    In China, fears that a rising dollar will destabilize trading in the yuan has swept financial markets, sending the Chinese currency to its lowest against the dollar in over eight years and raising concerns that outflows could increase. Such an outcome could signal further economic weakness ahead at a time when Chinese growth is slowing and could ripple through currency markets to push other emerging foreign-exchange rates down.

    “China is going to become a big concern,” said Paresh Upadhyaya, a portfolio manager at Pioneer Investments. “They’re already trying to manage capital outflows, and this is going to put more pressure on the country.”

    Japan’s yen fell to 118.18 against the dollar, its seventh decline in 10 days. That represents about an 11% retreat since Donald Trump was elected president Nov. 8.

    The weaker yen will make Japan’s exports more competitive and could boost growth, and Tokyo’s Nikkei 225 stock index has risen for eight consecutive days. But a falling currency will test policy makers at the Bank of Japan who in recent months have sought to anchor the yield of the 10-year Japanese government bond at zero.

    Now, though, prices on those bonds have been under pressure amid a global selloff on hopes of an improved economic outlook.

    Japan’s central bank is considering raising its assessment of the nation’s economy for the first time since May 2015 as the weaker yen boosts its exports, The Wall Street Journal reported this week.

    Analysts say that a faster-than-expected rise in U.S. interest rates will fuel the dollar’s rally into next year.

    The euro also edged closer to parity against the dollar, at $1.0415, its lowest level against the dollar since 2003.

    A few central banks have already acted to support their faltering currencies. Mexico on Thursday raised interest rates by a half-percentage point—twice what many analysts had expected—as it seeks to curb inflation driven by a weaker peso. Central banks in Indonesia and Malaysia have also moved to prop up their currencies since the U.S. election.

    Some analysts said that the Chinese yuan’s decline could revive some fears about competitive devaluations among developing nations, especially if Mr. Trump’s protectionist trade proposals spark a trade war.

    In the U.S., bond prices tumbled on Thursday, sending the yield on the 10-year U.S. Treasury note to 2.58%, its highest since September 2014. Prices drop when yields rise. The decline reflected in part a reaction to the Federal Reserve’s indication Wednesday that it expected interest rates to rise faster than previously projected.

    The Dow Jones Industrial Average rose 59.71 points, or 0.3%, to 19852.24, coming within 50 points of its first intraday trade above 20000 before cooling off in afternoon trading. Financial shares led Thursday’s gains, extending a sharp rally that began in the hours after Mr. Trump’s election. Since then, the S&P Financials index of banks, insurers and others is up 18%.

    A stronger dollar isn’t all bad. It increases the purchasing power of U.S. consumers by making foreign travel and imported products cheaper. And U.S. stock markets have been taking the dollar’s strength in stride with recent all-time highs, despite the threat that the strong dollar will curb a nascent recovery in corporate profits.

    In Europe, where growth has also been sluggish, the weaker euro could help support exports and inflation. Morgan Stanleythinks the euro will fall to parity with the dollar around the middle of 2017.

    But most vulnerable to the effect are emerging markets. More than $17 billion in foreign investment has departed emerging-market stocks and bonds since the U.S. election, according to the Institute of International Finance.

    Investors worry that Mr. Trump’s proposed protectionist trade policies could hurt exports from developing economies. Emerging-market debt also looks less attractive when U.S. and other developed-market bond yields are rising.

    Debt in these countries has risen in recent years, as many governments and companies took advantage of the global hunt for yield and issued more debt both at home and abroad. Developing countries have more than $200 billion in dollar-denominated bonds and loans due next year, IIF data show.

    The dollar’s rise could also intensify tension in developing countries already experiencing political turmoil, said Sireen Harajli, foreign-exchange strategist at Mizuho Bank. A rising dollar threatens to raise inflation in nations such as Mexico and South Africa by making foreign goods more expensive, while also depressing the value of commodities that many countries export.

    “With emerging-market economies, economic instability does often bring about political change,” said Ms. Harajli. “There is a risk that we may see political instability.”

    Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

    FG, oil majors sign $5.1bn JV settlement deal – Punch

    ‘Cash call exit’ll increase revenue by $2bn annually’

    By  Akinpelu Dada  and Okechukwu Nnodim

    The Federal Government on Thursday signed a deal with Shell, Chevron, Total, Eni and Exxon Mobil to clear unpaid bills worth $5.1bn for oil production joint ventures piled up over many years.

    The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said in a speech at the signing ceremony that the deal would unlock new investment in the country’s oil and gas sector, adding that the repayment would take place over the coming five years.

    He said the oil majors had given the country a discount of $1.7bn, lowering the original amount from $6.8bn.

    The agreement will also ensure that future Nigerian payments to production joint ventures with oil majors would be paid in time, according to the minister.

    Kachikwu also said that Forcados exports would resume soon, without giving any more precise information. The grade has been under force majeure since February after multiple attacks on the pipelines that carry it to the export terminal.

    The exit from joint ventures cash call agreements between the Nigerian National Petroleum Corporation and international oil companies will lead to an increase in the country’s revenue by $2bn annually, the Federal Government has said.

    This is coming as Vice President Yemi Osinbajo announced that the elimination of subsidy on petroleum products had removed a monthly financial burden of N15.4bn on the Federal Government.

    Osinbajo disclosed this on the occasion of the signing of an agreement for joint venture cash call exit and presentation of the 2016 petroleum sector scorecard by the Federal Ministry of Petroleum Resources in Abuja on Thursday.

    “The downstream oil sector has been deregulated through the elimination of petroleum subsidy, among others. The elimination of petroleum subsidy has removed from the government a burden of not less than N15.4bn monthly,” the Vice President, who was represented by the Attorney General of the Federation and Minister of Justice, Abubakar Malami, said.

    On the significance of the cash call exit, the Petroleum Resources ministry, in a document made available to our correspondent in Abuja, stated that the move would restructure the financing template for oil earnings, increase investments and boost government revenues.

    It said the agreement would bring clarity and stability to the management of the country’s main revenue source, adding that the exit had already received the approval of the Federal Executive Council.

    The ministry explained that the exit was part of new measures and strategies aimed at eliminating the burden of joint venture cash call arrears and securing future funding for the upstream petroleum sector.

    It said, “These strategies, which are fully supported by the National Economic Council, will lead to an increase in national production from the current 2.2 million barrels per day to 2.5mbpd by 2019, as well as reduction in unit technical costs from $27.96/barrel oil equivalent to $18/boe.

    “The net payments to the Federation Account is expected to double from about $7bn to over $14bn by 2020, and the immediate effect of the new cash call policy will increase net Federal Government of Nigeria revenue per annum by about $2bn.”

    Kachikwu pledged that the ministry would continue to drive innovation and change in its approach to delivering an oil and gas industry that would be internationally competitive and governed by open and transparent processes to ensure security of investment for both domestic and international investors.

    Inflation hits 18.48%, unemployment jumps to 13.9% – Punch

    Inflation hits 18.48%, unemployment jumps to 13.9%

    By Ifeanyi Onuba, Abuja

    The Consumer Price Index, which measures the rate of inflation in the country, rose by 18.48 per cent in November, figures released by the National Bureau of Statistics on Thursday revealed.

    The NBS said in the CPI report that the 18.48 per cent inflation rate was 0.15 percentage points higher than the 18.33 per cent recorded in October.

    The report blamed the rise in inflation rate on increases recorded in the housing, water, electricity, gas and clothing materials sectors.

    The report read in part, “The CPI, which measures inflation, increased by 18.48 per cent (year-on-year) in November 2016, 0.15 percentage points higher than the rate recorded in October (18.33 per cent).

    “During the month, the highest increases were seen in housing, water, electricity, gas and other fuels, clothing materials, books, liquid fuel, and passenger transport by air, motorcycles and shoes.”

    The report stated that communications and insurance indexes recorded the slowest pace of increase in November, rising at 5.61 per cent and 6.76 per cent year-on-year, respectively.

    It said the food sub index increased by 17.19 per cent year-on-year in November, up by 0.10 percentage points from the 17.09 per cent recorded in October.

    The Statistician General of the Federation and Chief Executive, NBS, Dr. Yemi Kale, said in an interview shortly after receiving an award from the Association of Northern Nigerian Students that from the recent data released by the bureau, it was obvious that the economy was beginning to recover.

    For instance, he said the rate of increase in inflation had been slower that it was during the first eight months of this year.

    This, he noted, was an indication that the policies of the government had started yielding results.

    “If you look at the rate of inflation, it’s been rising at a slower rate for the last four months and so, while it is rising, the pace of increase has been slow; which suggests that the problems are being gradually resolved,” he stated.

    The NBS also on Thursday said the country’s unemployment rate had risen from 13.3 per cent in the second quarter of this year to 13.9 per cent at the end of the third quarter.

    The bureau stated this in the unemployment report, which was released in Abuja.

    In the report, the bureau said the number of economically active people increased from 106.69 million in the second quarter to 108.03 million in the third quarter.

    It added that during the period, a total number of 554,311 fresh people out of those that joined the labour force were unemployed in the third quarter.

    This, according to the report, represents a 1.26 per cent increase over the previous quarter, and a 3.57 per cent increase when compared to the corresponding third quarter of 2015.

    The report read in part, “The number of underemployed in the labour force increased by 501,074 or 3.25 per cent, resulting in an increase in the underemployment rate from 19.3 per cent in Q2 2016 to 19.7 per cent (15.9 million persons) in Q3 2016.

    “This is a marginal increase of 0.4 percentage points between quarters two and three of 2016, and shows a steady rise in the rate since Q3 of 2015.

    “During the reference period, the number of unemployed in the labour force increased by 554,311 persons, resulting in an increase in the national unemployment rate to 13.9 per cent in Q3 2016 from 13.3 per cent in Q2.”

    The report stated that unemployment and underemployment were highest for persons in the labour force between the ages of 15-24 and 25-34, which represented the youth population.

    Market prices run wild – The Guardian

    By Marcel Mbamalu, Chijioke Nelson, Helen Oji and Toyin Olasinde (Lagos) and Chuka Oditta (Abuja)  

    2017 budget can’t help workers, says Labour

    One day after presenting his 2017 Budget which prioritised job creation, power and transport infrastructure for economic recovery, President Muhammadu Buhari was given a piece of very bad news.

    Nigeria’s data agency — the National Bureau of Statistic — yesterday released inflation numbers showing consumer prices for the month of November increasing by 18.48 percent year-on-year after an 18.3 percent record for the previous month. The November numbers are well above market expectations of 18.4 percent gain as the inflation rate accelerated for the tenth straight month hitting its highest level since October 2005. On a monthly basis, consumer prices went up 0.8 percent at the same pace as in the previous period, just as prices continued to rise for housing, electricity and food.

    Rising cost of food and other consumer goods will continue to put pressure on wages, further weaken the exchange rate and cause interest rate to move up while keeping prices perpetually high.

    Labour says its members are angry because the 2017 budget as presented by the President on Wednesday did not consider the welfare of its members in view of the inflation numbers. “Increase in inflation without any addition to wages means the government don’t care about welfare of workers in the country,” said, Mr. Idowu Adelakan, who chairs the Lagos State Council of the NLC.

    “Rising cost of goods and services and failure to consider workers’ welfare means that government’s anti-corruption war is directed only at the poor and not the rich,” Adelakan said.

    “The budget is full of repetition without any good adjustment for workers’ wellbeing. Market women keep lamenting that no one is patronising them and this is because of low purchasing power of citizens.”

    In the same vein, Director General of Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said high rate of inflation is a trend that the country has been struggling with in the last one and half years. He said it the major cause of rising poverty level in Nigeria.

    “The key drivers of inflation are: currency depreciation, high energy cost, scarcity of foreign exchange, trade policy and import duty issues,” Yusuf said,

    “Inflation is poverty because it reduces purchasing power. This is of great concern to us. The truth is that we need to augment some of these things we produce with import because, if we need to tackle this issue of pricing, we must get it right.”
    The inflation rate now measured as 11-year record high, will keep standard of living under pressure, with general rise in prices, high costs of funds and extended negative rate at 4.48, which is a disincentive for investment.

    Mr. Biodun Adedipe, an economist, said Nigeria found itself in a unique challenge of inflation and stunted growth, which only requires a clear-cut direction to tackle, particularly with identifiable infrastructure investment that would stimulate the economy and create jobs.

    Specifically, the latest rise in inflation was driven by higher prices for housing, electricity and food, a separate index, which rose to 17.19 percent from 17.1 percent in October, according to the NBS.

    “During the month, the highest increases were seen in housing, water, electricity, gas and other fuels, clothing materials and other articles of clothing, books, liquid fuel, passenger transport by air, motorcycles and shoes and other footwear.

    “The rise in the food index was mainly driven by increase in prices of imported foods, meat, bread and cereals and Fish. On a month-on-month basis, the Food sub-index increase by 0.88 percent in November from 0.86 percent recorded in October,” NBS said.”

    The development showed that the country is still deep into importation of food items that gulp hundreds of millions of foreign exchange, most of which can be produced locally, but hampered by infrastructure deficit.

    However, communications and insurance sectors recorded the slowest pace of growth in inflation index in the period under review, at 5.61 percent and 6.76 percent year-on-year respectively.

    Meanwhile, although the headline inflation rose year-on-year, it was at a decreasing rate of 0.78 per cent in November, compared with 0.83 per cent in October, an indication of moderation.

    The Urban index, which measures level of inflation in the cities as against the rural areas, rose by 20.07 percent (year-on-year) in November from 19.91 percent recorded in October.

    On the other hand, the Rural index increased to 17.10 percent in November, from 16.95 percent in October, while on month-on-month basis, the urban index eased by 0.03 percent and the rural index was also down by 0.05 percent.

    Risks to new oil deal – Kachikwu – The Guardian

    As producers hope to improve the market for oil prices, Emmanuel Ibe Kachikwu, Nigeria’s Minister of State for Petroleum Resources, joins CNBC to look at the risks that could impact recent oil deals.

    We talked in the wake of the OPEC deal over a week ago. Now we have a non-OPEC adherence to the deal. How much of a floor under the oil price which is about $50 dollars do you hope to create?
    Certainly, the aspiration is to get as close to $60 a barrel as we can. It’s a tall order but I think all the numbers are trending towards that given the fact that we haven’t even started executing the cut itself. This is just the momentum building on the back of the agreement. Everyone is hoping that we can get closer to $60. You want to keep the price within the $60 range. If it gets too high it becomes a problem in its own right.

    You gave me a great answer in Vienna about cheating. I very blatantly asked you, “what about the cheating?” People don’t trust the levels historically set by OPEC. You said to me this time it’s different. I wonder if you could just share that because I think one of the big concerns people have would be about adherence to this deal, but you think its different this time.
    I think it’s different because in the past you tended to force countries towards a coalition or towards a resolution. This time there’s a major consensus. Everybody’s hurting. Everybody has realised that it needs to be done for most of OPEC and indeed for non-OPEC economies to survive. There hasn’t been too much of beating people into line, it’s been more of a consensual build up. Secondly, there’s a group that has been set up to monitor this. Both the Opec and Non-Opec countries understand that both sides will have to keep to the deal otherwise, it will falter. I think the urgency of now, and the criticality of the economies that they have to protect is enough of an incentive for everyone to be in line this time.

    What worries you most about the part of this story that OPEC cannot control. Clearly some non-OPEC countries have signed up to the bill at this point but obviously, there are risks around how the shale producers may ramp up production in the light of a headline oil price increase. Is that the main worry and why the deal is so short or are there other things that concern you?
    Certainly, the shale issue is a major one, because if shale begins to mop up production heavily and begins to cut into the share of traditional shares or percentages of most OPEC members you’re going to see some reaction. Secondly, if other non-OPEC countries don’t come on board as rapidly as some have and decide to take advantage of it while continuing to amass their production that could lead to a price fall. Everybody is on the edge. Watching to make sure both sides keep to the deal whether they be OPEC and non-OPEC. Within OPEC we’re also very determined to make sure that we keep to the deal. Saudi Arabia has shown a great sense of leadership and momentum trying to rally everybody back from the initial policy and into a court zone. But like all associations where everything is hinged on perfect delivery, if anyone slips out of the boat they are creating a problem. We’re hoping that at the end of the day people realise that there’s a need to stay on board.

    Is it a source of regret for you and for your government that there wasn’t the will or the ability to do this 18 months ago; that the Saudis weren’t prepared to drive this deal back then?
    In some sense yes. Nigeria certainly hurt without that oil money so we would have liked to see this come to fruition very early, and I’m sure we would not have gone into recession if we had this deal in play on time. But having said that the reality of the Saudi lesson is that is they didn’t put this on board, if they didn’t drive everyone to understand that OPEC cannot be the can carrying entity, the ability to bring non-OPEC members on board would have been limited. We might have had a short-term loss, but I think in the long term it will be better for everyone that we went through that cycle.

    You just made some nice comments about the Saudis then, but do you think there was a real question mark on the relevance of OPEC and that the Saudis have done the right thing by shouldering the weight of these production cuts to get OPEC back into the game, to be seen as relevant to the oil market?
    Within OPEC itself we always believed OPEC was relevant, and the fact that the whole world looked to us even though we’re only a 40 per cent producer in the oil market made us always believe we were relevant. Outside of OPEC there were some credibility issues. Would we survive? Would we ever come back together? Would we ever be able to use the cartel power in ways that we did before? And I think Saudi coming back and rallying everyone with some huge numbers helped bring back the credibility and certainly convinced the likes of Russia to come on board.

    Can I ask you what happens in six months time because while you have an exception right now there might be pressure if there’s another deal in 6 months time if the market has not been rebalanced for those who had exceptions to be included in a new OPEC deal? How do you feel about that? Do you feel the pressure to get the market right in your own country and be a willing player to cut production in 6 months time?
    I think this is just the start of our momentum, and the thing we did in Vienna wasn’t a one-off. We agreed to continue to consult to make this wider body a monitoring instrument. It means that in 6 months time when this should be due for another review, if we feel that the market has not balanced enough, more cuts may be coming. But again that’s going to depend on what has happened in shale production. If within that period we find that what all shale producers have done is simply inch into the market and continue to ramp up volumes then there may be some question marks there.

    You flew to Delhi in between these meetings and you signed a memorandum of understanding with the Indians to give them a large percentage of Nigerian production going forward as well. How sensitive are key buyers of your product from China to India to the price of oil at say $58 to $63? You say $60 would be the ideal number for you, but I wonder what that does to lessen the ability of the market to balance itself if it was at $60 rather than at $40.
    My experience in India was that the price sensitivity became very high once we began to cross the 60 number. Countries are going to continue to deepen their ability to look for alternatives and look for how to save costs by virtue of limiting their consumption. That’s going to be an on-going thing and OPEC is going to have to deal with in the long term. On the whole I think that everyone realises that for investments to continue in these countries and for oil to even get produced at all. Some sensible number is needed otherwise investments will dry up like they have over the last 18 months. So the deal with India, which we still haven’t signed. We’re just trying to dot our Is and cross our Ts. All we’ve done so far is sign a statement of intent. But, there is a good appetite for Nigerian oil in Asian countries. There is obviously consciousness o the part of Nigeria with the sensitivity of pricing and I think that once we begin to cross the $60 margin, you’re going to begin to see some of the old reactions again?

    When is Nigeria going to realise a post-oil strategy which is going to benefit its population?
    A lot of things have gone wrong, and a lot of things could have been done better. We’ve lost many years of income that could have been applied to many sectors, so there’s a race against time. We are trying to restructure the economy and move more to agriculture and services. The contribution of those sectors to our GDP is increasing by the day. But the more important thing is that oil got us here positively and negatively and oil is also going to get us out of it so the first discipline that we need to do is clean up our oil sector. We need to make sure that the right incentives are there, eliminate corruption, and begin to grow refineries. Thirty per cent of our foreign exchange burden is on the importation of refined petroleum products and for a country that has produced billions and billions of barrels of oil to not have functional refineries is regrettable, but that’s something that we’re very focusing on right now.

    At $60 a barrel, what growth rates do you expect Nigeria to see in 2017?
    Well as you know Nigeria has been in recession for the last 6-8 months. If we can round out 2017 with a growth rate of 4-5% I think we will be delighted