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Eight months after the shutdown of the Trans-Ramos Pipeline, the Federal Government, Shell, Total and Nigeria Agip Oil Company Limited have lost about $1.9bn (N684bn) in potential revenue from the sale of crude oil.
Shell Petroleum Development Company of Nigeria Limited announced on May 25 last year that it had shut down production following the discovery of leaks on the pipeline, which is located in the swamps of western Niger Delta.
The SPDC is the operator of a joint venture involving the Nigerian National Petroleum Corporation, which holds 55 per cent; Shell, 30 per cent; Total Exploration and Production Nigeria Limited, 10 per cent; and NAOC, five per cent.
The Trans-Ramos Pipeline, which supplies crude oil to the SPDC JV-owned Forcados export terminal, has a capacity of around 100,000 barrels per day.
Calculations of potential lost revenue by our correspondent showed that the decline of 100,000 bpd in the nation’s oil exports in eight months meant a loss of $1.90bn or N684bn (using an exchange rate of N360/$1).
Bonny Light, the nation’s reference crude grade, traded at an average of $75.38, $74.72, $73.35, $79.59 and $79.18 per barrel in June, July, August, September and October respectively, according to latest data obtained from the Central Bank of Nigeria on Wednesday.
The international oil benchmark, Brent crude, against which Nigeria’s oil is priced, averaged $64.75, $58.92, $59 and $63.96 in November and December, January 2019 and February respectively, according to the US Energy Information Administration.
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SPDC is the operator of the Forcados export terminal. The pipeline usually carries between 200,000 and 240,000 barrels of oil per day.
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CBN signals end to official rate regime for naira
The Central Bank of Nigeria (CBN) may soon allow the naira to freely find its value, with a possible depreciation on the official rate, usually pegged at about N305/$, an update on its website has indicated.
The development is signaling an end to the most criticised foreign exchange rate window, which has been used mostly for government’s critical businesses that affect the public, particularly the importation of petroleum products.
If the move sees light of day, it will mean that the value of the naira at the official window is depreciated with its concomitant closure of the peg.
Yesterday, the apex bank, as opposed to the usual publication of the fixed exchange rate, opted to publish that “the rate will be market-determined.”
According to a report, the President of Shippers Association of Lagos State, Jonathan Nicol, said the Nigeria Customs Service had allegedly directed importers to pay for duties at the rate of N326 per dollar against the official rate of N306, citing an order from the CBN.
Also yesterday, the interbank rate depreciated by 0.2 per cent to N360.43 per dollar at the close of trading, while the parallel market remained steady at N360 per dollar.
A move toward a market-determined exchange rate would be welcomed by investors, who have long accused government of some level of capital controls and bemoaned multiple exchange rates.
The Chief Executive Officer of Nigerian Investment Promotion Council, Yewande Sadiku, was quoted as saying the apex bank was in talks with other agencies to move to a single rate for the nation’s currency.
For an economic analyst at Ecobank, Kunle Ezun, “putting that on the website means the central bank is gradually moving towards a single exchange-rate window. It is making the exchange rate more liquid to attract more inflows.”
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