Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel - Politics - Nairaland
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| Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 9:42pm On Nov 21, 2008 |
Nigeria's economy under threat as oil falls below $50 a barrel By Ayo Olesin, Sola Adebayo and Clara Nwachukwu with agency reports Oil prices, on Thursday, fell below the $50 per barrel mark for the first time in three and a half years, as fears of a global recession and weakening demand triggered huge sell offs in New York and London. advertisement Newswires reported that United States light sweet crude for December deliveries fell to $49.75 on the New York Mercantile Exchange, while the Brent crude, equivalent to Nigeria's Bonny Light, fell to $48.90 a barrel on the International Petroleum Exchange in London, the lowest since May 2005 and about 70 per cent lower than July's record price of $147. Energy industry experts said on Thursday, that this was not good news for Nigeria, as the sharp decline in oil prices raised the possibility of a serious deficit in the 2009 Federal Government budget, which is based on a revised $45 per barrel benchmark, down from $69 earlier projected. The losses in the international market were compounded by an indefinite shut down of 90,000 barrel per day of exports from Chevron's Escravos terminal due to an attack by militants on a major crude supply pipeline in Delta State. There were also reports that the Warri refinery had been hit by technical problems, which had resulted in the stoppage of production of refined products, raising the possibility of domestic fuel shortage this Christmas Chevron, which declared a force majeure on Thursday, said it had mobilised to repair the pipeline but it was premature to estimate when the work would be completed. Industry analysts suggested that the oil price slide might force another downward review of the 2009 budget projections, while capital-intensive infrastructure projects, including gas and power projects might suffer. There were also fears that sliding oil prices might constitute a disincentive for needed investments in further exploration activities by oil and gas majors. Members of the Organisation of Petroleum Exporting Countries are scheduled to meet on November 29, after opting to cut output by 1.5 million barrels per day. The Managing Director, International Energy Services, Dr. Diran Fawibe, said that Nigeria was at risk of a deficit budget if oil prices continued to slide. Apart from loss of revenue, he said many aspects of the economy would be affected, particularly the 2009 budget, which benchmark was on Wednesday, finally reduced to $45/bbl below previous estimation of $69/bbl by the Federal Executive Council. He said, "If the slide continues, it means revenue targets will not be achieved, and if government sticks to the $45/bbl benchmark, government will have to run a deficit budget, which is not good for the economy. "This will affect the capital budget, as government would have to rely on recurrent budget, which is even worse for us because capital budget will have a spiral effect on the economy. If the capital budget suffers, it means development will also suffer, especially infrastructure." Fawibe also pointed out that the continued depression of the market could limit countries' capacity to borrow. For Nigeria, which recently adopted the alternative funding measure, it would be more difficult for oil companies to borrow to execute oil projects. He argued that even if the oil price remained at par with the budget benchmark, there would still be negative impact on the excess crude revenue, and states would not have funds for their own developmental projects. Besides, he added, the cash call for the Joint Ventures would be affected because of poor funding due to dwindling revenue generation. He, however, said the situation could improve, "Although it appears the market is more turbulent than most people predicted, I think it would soon fizzle out. Just like oil price above $147/barrel was not sustainable in the long term, so also prices below $50/bbl might also not be sustainable in the long run. "What is left is to find an equilibrium, which is where OPEC comes in. Under the circumstances, it is certain OPEC will cut output to shore up prices. Maybe, not to get price up to $100/bbl, but something between $50 and $55/bbl." Also painting a gloomy picture, the Managing Director, Platform Petroleum, Mr. Austin Avuru, noted that the Federal Government might have to review the benchmark for the 2009 budget even lower. He said oil price below $50 was a very big problem for producing and consuming nations, especially for Nigeria, which economy was dependent on oil revenues. "We have a big crisis with so much of our production shut down. This is a very big problem because nobody projected oil at anything below $60/bbl this year, not the producers and even not the consumers. "Under the circumstances, only OPEC can salvage the situation using their machinery of trimming output. So it was a good thing that the clamour for Nigeria to pull out of the group because of quota issues did not work out, because we would have been in a worse situation now." http://odili.net/news/source/2008/nov/21/419.html |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by osisi6(f): 9:47pm On Nov 21, 2008 |
let the oil fall to 10 cents a gallon sef. maybe then we can "hear something" from those militants on speed boats |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by KarmaMod(f): 9:48pm On Nov 21, 2008 |
so when are we gonna go back to $1.50/gallon gas jare |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by grafikdon: 9:51pm On Nov 21, 2008 |
I think it is almost down to that and I hope it goes down to $0.50. Perhaps the loudmouth retrogressive countries out there will wake up. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by OBVIOUS(m): 10:07pm On Nov 21, 2008 |
This is bogus news!!!! Doesn't make sense to any good economist. How can oil affect Nigeria's economy when most of the profits earned, only goes to the pockets of specific individuals who move the money overseas!!! Such resources have never really affected Nigeria's economy. STOP WESTERN UNIONs/ MONEY GRAMS and see what will happen to the economy ? (psseeew) |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:09pm On Nov 21, 2008 |
I can't believe that Nigerians living abroad are praying for the downfall of their nation. @Seun: we should ban unpatriotic Nigerians here. Osis, Karmamod and Grafikdon surprise me. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by GoldCircle: 10:09pm On Nov 21, 2008 |
No Shaking!! what goes around comes around!Thank God say we no wack all the 'excess crude" money finish when oil be $140 per barrel!! |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:11pm On Nov 21, 2008 |
This is bogus news!!!! Not at all. Didn't you notice that the Nigerian economy improved immensely since the oil prices went high?. No matter how you steal the money, it will still trickle down to the common man. That is what John McCain was preaching to Americans but the Obama socialists will not listen. The high gas prices in America punished my pocket but whenever I remember that it's a sacrifice for my brothers and sisters in Nigeria, I take heart. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:12pm On Nov 21, 2008 |
No Shaking!! what goes around comes around!Thank God say we no wack all the 'excess crude" money finish when oil be $140 per barrel!! Obasanjo saved immensely for the rainy days but it seems that Yaradua has blown our savings. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:14pm On Nov 21, 2008 |
I think it is almost down to that and I hope it goes down to $0.50. Perhaps the loudmouth retrogressive countries out there will wake up. Imagine your relations in Nigeria and what will be their fate if your prayer is answered? Stop cursing us abeg. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by KarmaMod(f): 10:14pm On Nov 21, 2008 |
DeepZone: Benu soun Maybe when they realize that there's more to life than their oil, they'll do something. Where's my 75cents/gallon gas jo!  |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:18pm On Nov 21, 2008 |
Benu soun Who is they? Don't complain when schools start closing down in Ekiti because of lack of funds. Bad belle people.  How can you sacrifice your brothers and sisters to help foreigners have a better life? |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by OBVIOUS(m): 10:19pm On Nov 21, 2008 |
What was preached during the American election is nothing but rhetoric. To hold that as fact will be very disturbing. Economics is much more complicated that the "trickle down effect" preached during the election which was said to make thing SIMPLE to the common man who has no understanding of such, |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by OBVIOUS(m): 10:20pm On Nov 21, 2008 |
OBVIOUS: |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:20pm On Nov 21, 2008 |
What was preached during American election is nothing but rhetoric. To hold that as fact will be very disturbing. Economics is much more complicated that the "trickle down effect" preached during the election which was said to make thing SIMPLE to the common man who has no understanding of such, Where is the complication? Break it down please, Mr Soludo?. Truth is whether the rich steal money or not, they must spend it, contracts must be awarded and the money will eventually trickle down to the common man and market woman. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by OBVIOUS(m): 10:23pm On Nov 21, 2008 |
Truth is whether the rich steal money or not, they must spend it, contracts must be awarded and the money will eventually trickle down to the common man and market woman. You and I know that most wealthy Nigerian's don't spend money in Nigeria. Eudcation: abroad, most buy cars shipped from abroad, clothes abroad, bank account abroad, even lace for party abroad, at what point does it trickle down? The ones that may get a share of the wealth are those in the restaurant industry. When was the last time you went to Nigeria, if you don't mind me asking ? |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by osisi6(f): 10:24pm On Nov 21, 2008 |
trickle down economics of deep zone and Sarah Palin Thank God gas is approaching $1.60 in my neigbourhood I can at least heat my home without crying |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by OBVIOUS(m): 10:24pm On Nov 21, 2008 |
L O L |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by oderemo(m): 10:26pm On Nov 21, 2008 |
Lets ask ourselves , do we need the OIL? NO WE DONT . so let give it away free. if mineral resources is a blessing the reaches country will be the REPUBLIC OF CONGO . 2X THE SIZE OF CHINA, less populated have all the minerals you can dream of , but c what is hapenning to her.death ,depravation. war etc.it has been proven over time and time that all these so called minerals will get you no where without technology. has anyone seen the recent technolgy to extract oil from the deep sea? what resources do they have in china, india, malasia. japan, iceland, new zeeland,isreal[ A COUNTRY THAT SUPPLY CONSTANT WATER IN THE HOT desert} ETC . |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by grafikdon: 10:28pm On Nov 21, 2008 |
KarmaMod: Abeg tell am o. . . like we were not better off before the so called ''oil |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by Ibime(m): 10:33pm On Nov 21, 2008 |
I think Yar'Adua had set the budget for 2009 using £67/barrell as a benchmark, so this is bad news. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:39pm On Nov 21, 2008 |
From bogous contracts, high level spending because they live in the country etc. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:41pm On Nov 21, 2008 |
I think Yar'Adua had set the budget for 2009 using £67/barrell as a benchmark, so this is bad news. He should revise the budget. I think OPEC nations should come together and reduce oil production by at least 50% to push of the price otherwise it will be falling lower and lower everyday until the West recuperates from bad economy. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by diggler(m): 10:45pm On Nov 21, 2008 |
If this oil price does not rebound, wahala don dey Cos even if oil na $2 /bbl, chopins must dey for Abuja and the various state capitals. this time the standard excuse for failure to deliver on campaign promises will be; una no see say oil price don fall the only upside is that fuel prices should be brought down. Nigerians be who we are, will other prices esp. food follow suit. God na for ya hand we dey |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by OBVIOUS(m): 10:48pm On Nov 21, 2008 |
He should revise the budget. I think OPEC nations should come together and reduce oil production by at least 50% to push of the price otherwise it will be falling lower and lower everyday until the West recuperates from bad economy. Such reasoning is disturbing to say the least. Shows you don't know much about economics!!! |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by oderemo(m): 10:50pm On Nov 21, 2008 |
i repeat give the oil away free. lets think of it . non of the state govt will fight for any more allocation. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by OBVIOUS(m): 10:52pm On Nov 21, 2008 |
Giving it away for free doesn't mean it won't have worth or value. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by grafikdon: 10:53pm On Nov 21, 2008 |
DeepZone: 1. They will not have to worry about some genocide apologist ''wiping out" towns in the name of oil. 2. There will be no more free money (60 Million monthly) going to some indolent 'religious' 3. Income tax will be revamped and this is probably the BEST thing that could happen to Naija. . . why? Because Nigerians are notorious for crying foul only when tragedy hits their doorstep. Heads will roll (literally) when any imbecilic Governor decides to buy Mansions in Brooklyn with tax money. That sort of outrageous theft will have a direct impact on the masses, and their reaction. . . ? See the middle of No.3. 4. With reference to No. 3, The president and his band of 36 thieves will be put out of business since only those who want to make a difference, and keep their heads on their shoulders (literally) would be interested in running for public office. 5. Nigerians (People and government) will snap out of their oil induced indolence and put their unmatchable natural and human resources to good use. ETC. . . ETC After independence, we started WALKING towards the road to PERDITION, taking one step forward and a million backwards. Along came the oil doom and we all jumped into a train that has continued till date to take us to that abominable garden of retrogression/disintegration. Now the abominable train is about to run out of gas. . . I can only say ALLALUJAHHHH. . . I hope it continues until we wake up and elevate our country where it should've 30 years ago, Abeg Olumba Olumba people in the house, we need celebrate this wonderful development as we gyrate and bubble in Da Good Lord, African Style. . . Deepzone, 99.9% of your imbecilic leaders go into office with one thing plastered in their delirious minds. . . OIL WINDFALL and LOOT!!!! If you have ever spent sometime with any of these morons or anyone close to their Hall of Plunder. . . it'd take you months to recover from the shock. They are sick people from the pit of hell. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by cmatrix: 10:54pm On Nov 21, 2008 |
Our main export markets for crude are gearing up for the next wave of technology, Renewable Energy! Be it Solar, wind, or Nuclear, We need to make sure our government officials are not looting treasuries, but are investing in farming, new technology, and infrastructure that fosters the same. We'll be doomed if this is not done. Let's not hope on the Chinese or Indians to purchase crude for their energy-hungry industries. These guys will follow suit with US wrt newer sources of energy, this has always been the case. And for the US, this is their only way out of a very gloomy economy. Obama will no doubt in mind invest heavily on renewable sources of energy - this is the only way out of the US recession. The Chinese are kicking ass on all other fronts as it has to do with US revenue streams. , and also, it is quite possible that oil is a curse on Nigeria anyways - it has created unprecedented corruption in the government sector; The polity of “Do Whatever It Takes To Win”. Just maybe, without Crude we’ll become more innovative and competitive in the global arena of technological advancement. Just reading through the various blogs in Nairaland, you’d quickly realize that there are countless bright minds in or from this our great country. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:57pm On Nov 21, 2008 |
Such reasoning is disturbing to say the least. Shows you don't know much about economics!!!I ask you again to break down this economics you are making so much noise about since you are Mr Soludo. |
| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by DeepZone: 10:58pm On Nov 21, 2008 |
1. They will not have to worry about some genocide apologist ''wiping out" towns in the name of oil. Talk is cheap. It's always easier in theory. check out the response by Diggler below:
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| Re: Nigeria's Economy Under Threat As Oil Falls Below $50 A Barrel by Kobojunkie: 11:02pm On Nov 21, 2008 |
[size=14pt]Nigeria Cuts Benchmark Oil Price To $45 In `09 Published: October 20, 2008 13:37h [/size] http://www.javno.com/en/economy/clanak.php?id=194256 Nigeria has cut the proposed benchmark oil price in its draft 2009 budget to $45 per barrel from $62.5 as a result of the decline in world crude prices, a senior finance ministry official told Reuters on Monday. "Forty-five dollars is what we are working with right now, but it has to go to the National Assembly (for approval)," the official said, declining to be named. The 2009 budget in Africa's most populous nation had been expected to go before parliament earlier this month, but a sharp drop in oil prices over the past three months has played havoc with the key assumptions on which the spending plans are based. Next year's budget had been based on projected oil production of 2.3 million barrels per day (bpd) at a benchmark price of $62.5, compared with $59 in the 2008 budget. But fears of global recession have depressed oil demand in the United States and other industrial nations, driving world prices down by more than 50 percent from their peak above $147 a barrel just three months ago. U.S. crude for November delivery was trading at $73.80 on Monday. Nigeria saves any oil revenue above the benchmark oil price into an excess crude account, a pillar of IMF-backed reforms meant to guard against price volatility on world markets and help it to save money. |
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