General News
What the Recent Oil Disruption Means for Nigeria
By Lukman Otunuga, senior,Research Analyst,FXTM
The unprecedented Oil disruption in Saudi Arabia in September shocked the markets and triggered multiple financial reactions for investors across the globe.
Oil prices exploded 20 percent higher on Monday September 16 after attacks on Saudi Oil fields caused disruptions of 5.7 million barrels per day, roughly five percent of global Oil supplies. Oil later gave back gains after Saudi Arabia pledged that Oil production would be up and running by the end of September.
However, there are doubts that the damage – which is thought to run into the hundreds of millions of Dollars – will be fixed so quickly.
Dynamic influencing Oil market swing back and forth
The uncertainty is also disrupting Oil prices, which spike intermittently before calming on data like the US Energy Information Administration’s (EIA) report about a 2.4 million barrel build in Crude oil inventories on September 25.
On top of that, geopolitical tensions in the Middle East add more concerns for the short-term future of Oil markets.
Going forward, Oil prices are expected to be more sensitive to negative supply shocks, at least in the short term. If the serious tensions between Iran and the US escalate, Oil prices may be supported with a degree of upside potential.
OPEC continues with its quest to stabilize markets
Another factor to consider is OPEC’s reaction and possible change of mind over its supply cut policy. As recently as September 12, OPEC persuaded Nigeria to join supply cuts to prevent a global glut from drastically undercutting prices and Oil revenues for Oil-producing countries. The supply-side circumstances have changed considerably since then.
Recent reports have revealed that OPEC’s oil output fell to an eight-year low in September, pumping 28.9 million barrels per day (bpd) which was down 750,000 bpd from August’s revised figure and lowest monthly total since 2011.
Should Saudi Arabia experience more attacks or take longer than expected to restore normal Oil production from the damaged facilities, OPEC may need to reconsider supply cuts and increase production so its members can meet global supply demand.
At the time of writing, Nigeria’s Light Sweet Crude Oil Kwa Ibo and Bonny Light are trading at their normal level of $3 above the Brent Crude benchmark because Saudi Arabia has pledged to be back to normal light Crude oil production levels by the end of September. In the meantime, Saudi Arabia has restored output to 11.3 million barrels per day but is relying on sales of heavy Crude oil. Should Saudi Arabia disappoint the market’s expectations, light sweet Crude oil prices may change in Nigeria’s favour.
Overall, given how Oil sales account for roughly 70 percent of government revenues and 90 percent of Nigeria’s foreign exchange earnings, if the recent disruption results in a net rise in Oil prices, it could offer short-term support to the nation.
Impact on Nigeria’s economic growth
As an emerging market energy exporter, the prospects of rising Oil prices should feed back into Nigeria’s economic growth. Higher Oil prices would boost the nation’s foreign exchange reserves, promote foreign exchange stability and boost government spending in economic infrastructure which in turn would be positive for growth.
On the other hand, Nigeria’s fiscal and monetary policy makers must always be on the lookout for inflationary pressures. In August, inflation in Nigeria fell to 11.02 percent, a 43-month low. But higher Oil prices may squeeze company and consumer transportation budgets, re-igniting inflation.
Higher Oil price could hit consumer spending
The flip side of higher Oil prices is the risk of rising inflation. This would likely drag on consumer spending and complicate central bank efforts to ease monetary policy, which may end up pressuring economic growth.
On a larger scale, the threat of a global recession lurks around the corner. Rising Oil prices could also threaten global growth with higher running costs.
While Nigeria and energy producers would welcome higher Oil prices, everyone will lose if unaffordable costs tip the global economy into recession.
Diversification remains the cure to Nigeria’s oil dependence
In September, the Central Bank of Nigeria (CBN) left interest rates unchanged at 13.5 percent. Movements in the Oil markets have a direct impact on CBN’s rate decisions, so I am closely watching developments in this area. Especially when considering how the CBN Governor wants inflation to slow to 9% or less before he considers cutting interest rates further.
Long term, for Nigeria to reduce exposure to Oil volatility, the quest for diversification needs to build momentum. Nigeria could source growth from non-Oil sectors like Agriculture and Services.
In conclusion, until diversification reduces Nigeria’s dependence on Oil revenues, the economy remains vulnerable to Oil price volatility and an uneven demand-supply equation.
Nigeria Customs Service (NCS) is set to introduce an electronic declaration system to streamline and enhance compliance for travelers carrying cash into or out of Nigeria.
Speaking in an interview with the News Agency of Nigeria (NAN) in Abuja, Abdullahi Maiwada, NCS spokesperson, emphasized that the initiative aligns with efforts to strengthen Nigeria’s anti-money laundering framework and reinforce financial regulations.
“The Nigeria Customs Service (NCS) has announced the deployment of an Electronic-Currency (E-Currency) declaration form as part of its anti-money laundering measures for travelers carrying cash into and out of Nigeria,” NAN reported. The system will require travelers carrying amounts exceeding the legal threshold to declare them before arrival or departure.
Maiwada further explained the process, stating, “We have developed a system where, even before leaving your point of origin, you can scan a QR code, access the form, fill it out, and we will be able to see it from here.”
He noted that the initiative, set for rollout soon, will enhance monitoring and facilitate information sharing with relevant authorities.
Under the Anti-Money Laundering (Prevention and Prohibition) Act 2022 and the NCS Act 2023, travelers carrying over $10,000 (about N15.4 million) or its equivalent in negotiable instruments must declare the funds to Customs authorities.
To boost awareness, the NCS is working with airline operators to inform travelers through onboard announcements and plans to reinstate signage at airports and border points in English and French.
The move comes as part of broader efforts to tighten financial controls following a recent case at the Murtala Muhammed International Airport (MMIA), where Customs officials seized $578,000 from a passenger attempting to evade currency declaration regulations.
General News
Aquaterra Energy Secures Multi-million-dollar well Intervention Contract with Intrepid Energy in Nigeria
Aquaterra Energy, a leader in offshore engineering solutions, has secured a multi-million-dollar, multi-year contract with Intrepid Energy Limited (IEL) to deliver a bespoke subsea well intervention equipment package for a project in Nigeria.
Aquaterra Energy’s turnkey well access package will enable IEL to conduct intervention operations across multiple mature oil wells in the region, supporting enhanced reservoir production.
The contract includes the supply of a complete seabed-to-surface intervention system and package, spanning from the subsea tree to surface intervention equipment.
Key components include Aquaterra Energy’s TRT tieback tooling, which provides production bore and annular access, a lightweight well pressure control system, and an ISO 13628-7 qualified open water intervention riser with an integrated tensioning system. In addition to equipment provision, Aquaterra Energy will also deliver ongoing offshore engineering support throughout the project.
The 7- 3/8” lightweight well access solution, has been specifically engineered for deployment from jack-ups and lift boats. This innovative approach offers a cost-effective and operationally efficient alternative to floating vessels, reducing intervention costs while maintaining high safety and performance standards.
Andrew McDowell, Delivery Director at Aquaterra Energy comments: “Our expertise in offshore engineering allows us to develop tailored intervention solutions that address the operational challenges of subsea well access.
This system has been engineered for efficiency, ease of deployment, and safety, helping IEL optimise intervention activities across Nigeria while reducing costs. By delivering a complete, integrated package, we are simplifying complex operations and enabling operators to maximise production potential.”
Engr Seun Alonge, CEO at Intrepid Energy Limited adds: “Working with Aquaterra Energy marks a significant step forward for our intervention operations in Nigeria. Their specialised technology enhances our ability to execute intervention programmes efficiently, maximising performance across our assets.
By combining Aquaterra’s technical expertise with our deep understanding of the local operating environment, we’re confident this collaboration will enhance production outcomes and create lasting value for our operations in the region.”
The project is set to support intervention operations over multiple years, with Aquaterra Energy providing ongoing technical expertise, with a dedicated team of engineers providing ongoing service support throughout the project.
George Morrison, CEO at Aquaterra Energy: “Delivering reliable and efficient well access solutions for shallow water subsea operations is central to how we support offshore operators.
This collaboration with IEL reinforces our commitment to providing cutting-edge engineering solutions that enhance efficiency and reduce operational costs. With West Africa playing an important role in the global energy sector, we’re proud to continue supporting its offshore industry with our expertise and innovative technologies.”
Federal government has temporarily suspended the controversial annual dues imposed on public interest enterprises by the Financial Reporting Council (FRC) after fierce opposition from businesses.
Jumoke Oduwole, minister, Industry, Trade, and Investment, announced the decision during a Ministerial Consultative Meeting in Abuja on Wednesday.
The move follows mounting pressure from private sector groups, including the Nigeria Employers’ Consultative Association (NECA) and the Manufacturers Association of Nigeria (MAN), who slammed the Financial Reporting Council (Amendment) Act 2023 for burdening companies with excessive fees.
The Act mandates cumulative annual charges for non-listed entities and imposes a harsh 10% monthly penalty on unpaid dues, compounding until full payment, a provision that sparked widespread backlash.
At the meeting, major industry players like NECA, MAN, the Nigerian Association of Chambers of Commerce (NACCIMA), oil producers, and telecom operators warned that the fees would cripple businesses already struggling in a tough economy.
Oduwole clarified the suspension, stating, “The government has decided to direct the Financial Reporting Council to pause in the implementation of the new annual dues. You know that I am a lawyer, and a suspension request by the organised private sector would be in contravention of legislation duly passed by the National Assembly. A pause is an administrative process simply to review, in line with what we discussed today.”
She assured stakeholders that the halt would last no longer than 60 days, with a technical working group—including FRC officials and private sector representatives—set up to reassess the policy.
“We are a listening administration. The private sector has requested a range from three months to an indefinite suspension. We are not going to do that. So, at the most, 60 days is in my estimate. We are going to set up a technical working group comprised of the FRC and the organised private sector who have formally written in, and this will be reviewed,” Oduwole emphasized.
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