Despite Brent-crude futures rallying in recent weeks, Nigeria, is facing a fast-looming future without reliance on fiscal revenue from its massive oil wealth, Bloomberg has reported.

Amid the economic fallout from the COVID-19 pandemic, which has brought to a halt economic activity and travel, demand for crude has been crippled, resulting in a dramatic oversupply.

Accordingly, a glut of Nigerian oil has been bringing the country about $10 less than the $30 a barrel registered on Tuesday.

“It’s now dawned on everyone across the country how severe this threat is. There is a possibility that at least for three to five years, there’s going to be no revenue flowing to the government from oil,” Andrew Nevin, a partner and chief economist for Nigeria at PricewaterhouseCoopers LLP, told Blooomberg.


Once oil prices, which normally contribute about half of Nigeria’s fiscal revenue, are at around $20 a barrel, Nigeria receives very little cash for its crude, Nevin of PwC was cited as saying at a webinar on 30 April.

Current global measures to fight the spread of COVID-19, with lockdown procedures, travel bans and shut industries, have driven oil prices to new lows where they fail to cover the costs of pumping barrels for many of Nigeria’s companies, writes the outlet.

Despite such low prices, on 5 April traders were cited as acknowledging that around a quarter of Nigeria’s oil cargoes for his month were still awaiting buyers, with at least six tankers used as storage space for about 4.5 million barrels of crude were idling off Gibraltar and nearby Ceuta.
According to tanker tracking data cited by Bloomberg, the tankers, floating in the area since the end of March, were about to be joined by another one.

Despite such low prices, on 5 April traders were cited as acknowledging that around a quarter of Nigeria’s oil cargoes for his month were still awaiting buyers, with at least six tankers used as storage space for about 4.5 million barrels of crude were idling off Gibraltar and nearby Ceuta.

According to tanker tracking data cited by Bloomberg, the tankers, floating in the area since the end of March, were about to be joined by another one.


On Tuesday Nigeria’s Finance Minister spoke in a webinar to deplore the twin challenge of dealing with the coronavirus epidemic itself and economic impact from it facing the country.

“It’s a double whammy. This has set us back significantly,” said Zainab Ahmed.

Clement Agba, minister of state for budget and national planning, echoed the dismal forecasts, saying: “It is no longer a secret that government revenues have collapsed.”

Nigeria was already struggling before the pandemic, as a US shale oil boom had slashed the country’s crude exports to America.

About 40 to 50 percent of the oil was typically sent to the US.

Amid the dire forecasts, Nigeria has sought a $3.4 billion loan from the International Monetary Fund (IMF) to shore up the country’s 2020 spending plan.

It’s also requested a further $3.5 billion from the World Bank and other financial institutions.

In late April, the IMF reviewed its earlier forecast of an anticipated 2 per cent growth of Nigeria’s economy, predicting it would shrink by 3.4 percent in 2020.

According to the IMF, crude revenues were predicted to decline by $26.5 billion this year, down from $54.5 billion in 2019.

With oil making up 9 percent of the Nigerian economy, crude exports fetch over 90 per cent of foreign exchange earnings.

“This is a period of crisis… Job losses are imminent across the petroleum industry. The impact of this will start reflecting from June and July.

“The reality is that some members will certainly be impacted.

“What matters most to us is how to manage the process of any of such expected exit,” Shell Nigeria’s Fortune Obi, a spokesman of the country’s oil union for senior workers, was quoted as confirming.

The economic downfall could spark social unrest in a country that has witnessed spells of militant violence for years, with oil facilities often targeted by protesters lashing out against allegedly unfair practices by the government and large oil companies.

Regarding possible future government measures, experts predict there will be pressure to keep oil wells pumping, with focus on maximizing revenue by slashing output from high-cost producers.

Deep offshore operators would potentially be the hardest hit from such moves, said Cees Uijlenhoed, chief financial officer First Exploration & Petroleum Plc.

He added, optimistically, that prices might tentatively reach around $50 a barrel by the end of 2020.

https://www.pmnewsnigeria.com/2020/05/06/nigerias-oil-revenue-dries-up-and-may-be-so-for-next-3-years-bloomberg/



Lalasticlala

Invest in agriculture they won't listen maybe when it dries permanently everybody eyes go clear

Time for Nigerians to roll up their sleeves even further.

Time to remove fuel and power subsides, and diversify into industry, and to stop pretending there is a national cake...because there isn't one.

Time for state governors to make the hard choices to industrialize, and to stop being so corrupt. Ditto federal government.

Economists have long known about “Dutch disease,” which happens when a country becomes so dependent on exporting natural resources that its currency soars in value and, as a result, its domestic manufacturing gets crushed as cheap imports flood in and exports become too expensive.

What the PISA team is revealing is a related disease: societies that get addicted to their natural resources seem to develop parents and young people who lose some of the instincts, habits and incentives for doing homework and honing skills.

By, contrast, says Schleicher, “in countries with little in the way of natural resources — Finland, Singapore or Japan — education has strong outcomes and a high status, at least in part because the public at large has understood that the country must live by its knowledge and skills and that these depend on the quality of education. … Every parent and child in these countries knows that skills will decide the life chances of the child and nothing else is going to rescue them, so they build a whole culture and education system around it.”

Pass the books, hold the oil

This is a great sign that is time for Nigeria to diversify it's Economy, let's stop depending on crude oil. Agriculture is the best alternative to a stable economy because human won't stop consuming Foods. Another is Entrepreneur. Please Nigeria Government should invest massively in these sectors because from all indication, Crude oil is gradually falling as the world's precious gift.

Divert to non-oil dependent economy with focus on renewable energy sources.Stop all the useless oil exploration ventures now.Mechanized farming, heavy industrialization, Encouragement of SMEs etc.

Adequate funding of ICT research institutes, improving the cyber security of the country to enable international technological and entrepreneurial platforms, improving on our telecommunications system and subsidizing processes of technology, creating opportunities for investors in ICT to come in some more.

Egungun finally strolled into the ocean.

kikero:
Time to remove fuel and power subsides, and diversify into industry, and to stop pretending there is a national cake...because there isn't one.

Time for state governors to make the hard choices to industrialize, and to stop being so corrupt. Ditto federal government.

Why can't they work and steal at the same time? I know it's almost impossible not to loot in elective positions but you can work massively and still eat your share. Nigeria politicians don't understand, dumb fucccckkkssss

Hmmmmm,, there are a lot of inconsequential ministries,, cut dem off.. I know of a lady at fire svc,, she hardly go to work,, but alert every months..

Dont worry, the least poorest states NBS published will be fine just like they were during last recession.

https://www.youtube.com/watch?v=5KYneTiECzk

COVID-19 crisis curbs oil demand: Nigeria braces for further cuts

Africa's largest oil producer, Nigeria relies heavily on oil revenue for its economy but the huge surplus in global supply is causing further damage.

If this is what it would take for total dismantling or reconstruction of this unholy matrimony to be achieved, mashallah.

I hope it remains like this till kingdom come. Las las make all men go their way. No joy.

Not surprised at all.
The reason some oil companies are leaving.

Also the reason Buhari and his people were bent on looking for oil near lake chad.

Not bad,anything that has beginning has an end. Make everybody rest.

Racoon:
Divert to non-oil dependent economy with focus on renewable energy sources.Stop all the useless oil exploration ventures now.Mechanized farming, heavy industrialization, Encouragement of SMEs etc.

Adequate funding of ICT research institutes, improving the cyber security of the country to enable international technological and entrepreneurial platforms, improving on our telecommunications system and subsidizing processes of technology, creating opportunities for investors in ICT to come in some more.

I read anambra has loads of gas but they refused to tap into it.

Tell government to diversify completely from oil the said No,now it's too late,and b4 other sectors will wake up will take years, because Nigeria politicians have failed.

Before oil, weren't we earning revenue from "something"?

Time to develop agriculture

watch how thieving governors will try to impose unnecessary taxes on the masses they never empowered in coming years

They are now surviving on Chinese and IMF loans. By the time the abo.kis realize that there is no more oil revenue to loot, they will simply walk away from the fake country

Adieu Zoogeria

It seems Nigeria is cursed with bad leaders: I don't know....
#Iyayin

The real deal is about to strike.

News of the century

NO GROUND HARD LION NO GO CHOP GRASS

The big oil producers are desperate to eliminate the smaller competitors. Nigeria is a very easy target. All countries like Russia and Saudi Arabia will do especially now there is a massive historical glut is to sell their oil cheaper than the rest. Even with the OPEC agreements, Russia and Saudi Arabia are not obeying the agreement as signed. The fight is still ongoing secretly because it’s now about market share.

Nigeria will have to discount its oil to a daily loss just to maintain its current market share.

We are talking about the corona effects on oil
We are also talking about the OPEC plus crisis

But no one is taking about the effects massive production of electric vehicles is causing. This one will put the nail in the coffin for small oil producers like Nigeria.

Cc: lalasticlala

This is not a good time to pray for 'oil job'.

Perhaps now the clueless and incompetent government will pay attention to other sectors of the economy because overreliance on oil revenue is what has brought us to this sorry state.