Exclusives

Nigeria’s LNG sparks interests from Japanese investors

by ISAAC ANYAOGU

November 25, 2016 | 12:50 am
  |     |     |   Start Conversation

Japanese investors are indicating a willingness to invest in gas development infrastructure and liquefied Natural Gas (LNG) type facilities in Nigeria.

“As you know, over the last one year or so, the markets in the US began to thin out for gas, we have managed to move quite a lot of our gas to delivery markets in Asia,” Ibe Kachikwu Nigeria’s minister of state for petroleum resources told Bloomberg TV.

Kachikwu further said, “Japan being one of the beneficiaries, has been very helpful. The conversations I have had so far have been along the lines of willingness to invest in gas development infrastructure and LNG type facility to provide a market base for the sale of gas.

Last year, Taku Miyazuki, Japan’s trade commissioner to Nigeria and Managing Director of the Lagos office of Japan’s External Trade Organisation said bilateral trade between Nigeria and Japan has reached $4.5 billion.

While Japan’s exports to Nigeria comprised mainly machinery, steel products and vehicles, Nigeria’s exports to Japan comprised mainly natural gas and sesame seeds. Japan is keen on deepening this trade with investment in gas development infrastructure in Nigeria.

Kachikwu also expressed confidence that an OPEC agreement to cut production with the aim of shoring up prices will hold when the 14 member cartel holds a regular semi-annual meeting in Vienna, Austria on November 30.

He said oil prices will firm at $50/barrel for the rest of the year if a deal is reached and that Russia and some other non-OPEC countries will take a cue from a positive OPEC decision to cut production.

“I will rather say if there is a deal, you may be looking at oil prices firming at $50. I’m not sure I am optimistic enough to say mid 50s yet, that could come with time. If we don’t sign a deal, the $44/45 you are seeing today will definitely be challenged,” he said in an interview monitored on Bloomberg Television.

In September, OPEC members agreed to cut production to between 32.5 million and 33.0 million barrels per day – an effort to prop up prices – from the organisation’s latest production estimates of 33.64 million bpd.

Kachikwu also said that Nigeria has ramped up oil production to 1.9m barrels per day due to reduced militancy in the Niger Delta.

“We have come down from 2.1m barrels within the last three weeks to 1.9m bpd. It is work in progress and President Buhari is working hard to solve the problem.  We are seeing some progress but it will take time.

“I am hopeful that we can end the year with production returning to 2m barrels and far above the 2.2m barrels projected this year.

“By 2017 we will see fewer disruptions to our oil production because by then we would have found a formula to the Niger Delta problem,”

The OPEC agreement reached in September exempted Nigeria from production cuts due to the effects of militants activities on oil infrastructure.

The meeting slated for November 30 is for OPEC members to agree on exact cuts to their individual production which is proving tricky.

“We also have to deal with the fact that the US market is beginning to experience again a higher production, Russia hasn’t exactly agreed to a cut, though there’s been a lot of promise about a cut, so there is still a lot of work required outside the OPEC corridors to be able to get the market firmed,” Kachikwu said.

Analysts are also hopeful that a deal is reached and many forecasts have been positive.

“I am looking forward to the OPEC meeting next week in Vienna. We expect OPEC and non-OPEC oil producers will make a deal to bolster oil prices,” said Jason Schenker, a financial market expert at Prestige Economics, LLC on his Twitter page.

Merrill Lynch Global research analysts predicts prices may briefly fall to sub-$40/bbl before gently recovering in a $40-45/bbl band if a deal is not reached but says that possibility is “least likely”.

For many OPEC countries, oil price recovery is a matter of economic survival. Nigeria’s economy sank deeper into recession this week when released GDP figures show a fall of 2.24 per cent.

Nicolas Maduro, Venezuela’s President is willing the outcome of the meeting to be positive he has dispatched his oil minister to Russia to help bring other producers on board. His country economy has collapsed and inflation is expected to top 1,600 per cent in 2017.

ISAAC ANYAOGU


by ISAAC ANYAOGU

November 25, 2016 | 12:50 am
  |     |     |   Start Conversation

Big Read |  

Analysis

What Nigeria must do before signing AfCFTA

Nigeria’s President Muhammadu Buhari last Wednesday gave a hint that he would sign the African Continental Free Trade Area (AfCFTA)...


MTN Banner ADS 2


WSE

Newsletter Fixed income