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Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market - Politics - Nairaland

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Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by ichomi(m): 2:24am On Jan 28, 2013
Nigerians whose pastime is bickering over oil resources may soon find out that what they consider as the goose that lays the golden eggs will no longer give them the resources to steal from. Oil may soon be selling for far below the 1982 price level. No thanks to President Barack Obama who, during his first term inauguration urged Americans to find a solution to the country’s continued dependence on external oil. Five years down the line, America is almost self- sufficient in oil production and is now turning down offers from traditional suppliers.

America is one country where when the government decides on a line of action, it follows through. But in Nigeria, for over two years now, the issue of the Petroleum Industry Bill passage has been with us without progress. While others are busy finding alternative to crude oil as means of energy, Nigeria’s policymakers are busy stealing the little resources available to diversify the economy. Shamefully, just last week, former President of Botswana said at Daily Trust Forum that it amounts to criminal negligence for Nigerian leaders to continue to steal the people’s resources entrusted to them through corrupt practices.

Last week, the news wire services were awash with reports that the United States, the highest importer of Nigeria’s crude now gets so much crude from its own shale deposits that Canadian exporters to US are selling as far afield as Europe, showing how deeply the U.S. energy revolution is transforming global oil flows. As recently as 2011, close to 100 per cent of Canada’s crude exports went to its neighbour, the United States, according to the U.S. Government’s Energy Information Administration (EIA). Oil-Report

But trade and shipping sources said more than two million barrels of light crude from Canadian offshore oilfields have gone to Europe in the last month, a taste of what is to come. The change is due to technological advances the U.S. expects will bring 900,000 barrels per day (bpd) record jump in its oil output to 7.3 million bpd in 2013, from places like the Bakken shale deposit in North Dakota that now feeds U.S. East Coast refineries served by Canada.

While this revolution is taking place in the international oil market, Nigeria’s federal executive arm of government is at war with federal legislators on the right budget benchmark for crude oil, but the oil market equation is fasting changing against Nigeria. While the executive favours the use of $75 per barrel, the legislators pegged the budget at $79. Both parties will soon discover that they have been too optimistic about the international oil market. From the look of things, both sides should review the budget and reduce the benchmark to $60 per barrel.

US refineries’ traditional supplier, Nigeria, is to seek alternative customers and is feeling the pinch of the new Canadian competition in its established European markets. Besides Canada, other traditional suppliers to US market will seek customers in Europe and Asia. If most suppliers of crude are now to face a shrinking market in Europe, one thing is sure, the price of crude will nosedive southward, meaning a crash in prices of crude. This apparently will derail the 2013 budget, no doubt.

Hitherto, US oil reserves have been too expensive to recover using old technology. New technology of a drilling technique called hydraulic fracturing, or fracking, in which water, sand and chemicals are forced deep underground to drive out trapped oil and gas, have allowed access to millions of barrels of U.S. oil that were previously unattainable. This shale oil is sweet – meaning it has low sulphur levels and is suitable for U.S. refineries – like the Canadian and Nigerian oil it is supplanting.

To the average American oil trader, Shale oil is making its way to the east coast of the United States by rail instead of shipping from long distance, so this is backing out offshore sweet east coast Canadian and Nigerian production. For oil traders, the profit margin had widened sufficiently for arbitrage as it allowed for a nominal profit of nearly $1 million on 600,000-barrel shipment.

The question is, where is Nigerian NNPC seeking new markets? Apparently as it is with Nigeria, they have gone to sleep until one day, they find that there is no market for Nigeria crude. What then will happen? Federal allocation to states will dwindle, salaries will remain unpaid, Federal Government will borrow and borrow to finance the budget, the deficit will grow wider and the private sector will be crowded out of access to credit.

The scary thing is that rising U.S. shale oil output has already started re-routing flows of Nigerian and Algerian light sweet crude oil which used to flow regularly to the United States. U.S. imports of light, sweet crude will fall to virtually zero by 2014, an executive of French energy company, Total’s trading arm predicted in October.

This progressive upheaval in crude oil patterns has prompted European refiners to look at changing their slates – lists of suitable crude oil grades for use as feedstock — to adapt. Traders said that the extra volumes of Canadian crude arriving
in Europe have depressed prices for Nigerian grades, which have fallen around $1 since early December.

Nigeria’s Federal Government functionaries, governors and legislators who have been feeding fat on the proceeds of crude sales should be ready to drink the crude when it returns unsold.

SOURCE http://www.emmanuelbabatunde.com
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by fagin1982(m): 6:25am On Jan 28, 2013
You are very right with your report...I read about it too...its a huge problem for Nigeria...I just wonder what its gona look like when USA shuts down completely on Nigerian Oil...Serious nations re busy upgrading while Nigerian Politicians wallow in corruption and ignorance..

God bless my Homeland...The struggles of our Heroes past shall never be in vain
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by omiobo: 6:37am On Jan 28, 2013
when Nigerians start feeling the pain I believe they will stand up against the corrupt leaders to save the future of the next generation.
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by Tolexander: 6:44am On Jan 28, 2013
That is going to be a calamity to the economy of our nation which can lead to total paralysis due to the overdependence on oil.
But our government is myopic to examine the effect of this US plan in the long run and will also be clueless to start to consider the next line of action to be taken if US decide to actualise their plan.
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by ba7man(m): 6:46am On Jan 28, 2013
In a way, I'm happy b'cos we'll now all be forced to think. There are countries far richer than Nigeria that don't produce oil....Even foreign companies whose budget outweighs our oil income. We should be getting ready to go back to Agriculture, coal, tin, bitumen etc. But i'm sure they'll currently be considering selling to China instead.
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by manny4life(m): 6:50am On Jan 28, 2013
This is sorrow in disguise, at least now, the issue of true federalism will resurface - how do states start generating their own revenue since federal purse can no longer hold. NASS will be forced to look within themselves with issue arise.
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by OmoTier1(m): 7:05am On Jan 28, 2013
In as much as I do not surrport the mismanagement of the proceeds of oil by the government, the writer of this article is very much unaware that Nigeria gold mine is not oil but GAS! Gas is going to continue to be in high demand so long as industries and homes exist in the West and Far East.

Also, in as much as the US will like to be energy independent by relying on Her own crude oil for her energy needs, they still have a very long way to go. Besides, Nigeria crude is now finding its way into other countries like India, Indonesia, which are much bigger or are of comparable size to the US energy market.

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Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by yimikaa: 7:06am On Jan 28, 2013
This is serious... sad.. Nigeria,a country that has no plans for the future of its economy, citizens e.t.c. Once U.S stops buying our crude,we are in SOUP..time to diversify into other sectors of the economy.
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by manny4life(m): 7:11am On Jan 28, 2013
Omo_Tier1: In as much as I do not surrport the mismanagement of the proceeds of oil by the government, the writer of this article is very much unaware that Nigeria gold mine is not oil but GAS! Gas is going to continue to be in high demand so long as industries and homes exist in the West and Far East.

Also, in as much as the US will like to be energy independent by relying on Her own crude oil for her energy needs, they still have a very long way to go. Besides, Nigeria crude is now finding its way into other countries like India, Indonesia, which are much bigger or are of comparable size to the US energy market.

Well Russia is already supplying to most of Europe (according to the last time Gazprom messed up their supply).

If we could not readily supply ourselves gas to power up our power plants, do you think we will be able to produce in the millions for export? In fact, Nigeria broke her contractual agreement with Ghana when they couldn't meet up with supply. Gas or not, crude oil is what finances our budget, and unfortunately, we're gonna see the hit.

The question isn't that it won't sell, but for how much? Few months ago when this ws going on, Asia countries were buying way lower because of associated cost involved, let alone when U.S. is handing off from Nigerian crude. Nigeria will be desperate to sell for any price available.
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by djon78(m): 8:07am On Jan 28, 2013
hahahaha i laugh in swahili, he who fails to plan has planned to fail.

when i began to notice the issue with oil was in college, when i did mini research assgnment in global supply chain, i discovered that all the global car manufacturers from toyota, to honda, to american car producer like gm to other western companies invested heavily in alternative source of energy which will be less dependent or non depeendent on oil. today there are more than 10 million hybrid cars in us alone which run on ethanol, almost half of cars in brazil run on bio fuel made by sugarcane

also i knew that there were serious issues in global oil supply was when last year, saudi arabia the worlds highest oil producer overhauled there entire oil ministry, and now set up ministry on alternative source of energy as its main ministry with billions of $ budgeted to this ministry, i asked myself 4 saudi arabia puting a lot of resources on this alternative source shows that the end of oil is at hand.

in all these what are nigerian leaders doing, absolutely nothing until they will soon realise that no body needs their oil then they will drink the oil.

look at the arabs diversifying their economies, dubai diversified from oil to service related industry, emirates airline has moved to be one of the best airline in the world beating western airline hands likewise qatar airline and etihad are coming up too, some weeks ago emiratesnow has the biggest terminal for airbus 380 the bigest plane in the world, the abhudabi soverign wealth fund with over $1 trillion is buying up many asset across the globe, likewise qatar is investing in different assets globally.
why i am mentioning the arabs is because God blessed nigeria with the same oil he blessed the arabs but instead of investing our leaders have stolen away the money, sometimes i weep 4 black man, God gave us resources, we are the most endowed with natural resources, we have no reason to be poor, but look around and u will see level of poverty in the country caused by us.
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by cocoduck: 8:27am On Jan 28, 2013
I love this info. Who says Nigeria will still exist in 2015
Re: Dark Cloud Over 2013 Budget As Nigeria Loses US Crude Oil Market by inspirenet: 9:31am On Jan 28, 2013
cocoduck: I love this info. Who says Nigeria will still exist in 2015



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