30 January 2013

Nigeria: U.S. Oil, Pipeline Vandals Threat to Budget Estimates

Photo: Leadership
Pipeline vandals

The federal government may have tough times implementing provisions of the 2013 budget as United States of America's planned increase in crude oil production as well as theft and pipeline vandalism continue to threaten crude oil output, thus affecting revenue projections for the 2013 appropriation.

The US which takes a huge portion of Nigeria's crude will from this month, January add about 900,000 per day to its daily production of 6.5million barrel per day thus raising its total output to 7.4 million barrel per day. This means that Nigeria's crude oil sale would face difficulty finding market

Besides having to look for new markets for the country's crude oil, increased oil production in US could also bring down the price of the commodity in the international market, thus further affecting Nigeria's projected revenue.

However, the Central Bank of Nigeria (CBN) yesterday ordered immediate investigations of banks' transactions with European Investment Bank (EIB) in the last four years.

The apex bank ordered banks to submit returns on EIB's investments for January 2008 to December 2012, to its Director, Trade and Exchange Department, within 24 hours.

LEADERSHIP gathered that CBN is ordering for these returns in order to ascertain the current level of the investments from Europe in Nigeria through EIB, which is the European Union (EU) bank.

According to the apex bank, in a circular issued to banks on Monday and posted on its website yesterday, ordered that returns must be received in Trade and Exchange Department CBN Headquarters latest 12 noon yesterday.

The circular signed by CBN Director of Trade and Exchange warned all dealers to ensure compliance accordingly as failure to comply would attract severe sanctions, including suspension from the foreign exchange market.

Already on the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at $96.04 a barrel in the Globex electronic session. Also March Brent crude on London's ICE Futures exchange fell $0.14 to $113.14 a barrel.

The crude oil production in the US, according to the latest monthly report of US Government's Energy Information Administration (EIA, averaged about 6.5 million barrels per day in September 2012.

The EIA has predicted that the US will overtake Saudi Arabia and Russia as the world's biggest producer of oil by 2017.

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