A Review of the Nigerian Energy Industry

Financial market update

20 November 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – China Petrochemical Corp, seeking to reverse a decline in oil reserves will by a 20% stake in an offshore Nigerian field from French explorer Total SA for about USD2.5bn. The OML 138 block includes the Usan field which started output in February. This deal is expected to give the Chinese company 36,000 barrels a day of oil production when the field reaches maximum output.

China – The market survey this month forecasts no change in the reserve ratio through the end of 2012. Foreign direct investment in China fell for the 11th time in 12 months, Commerce Ministry data showed today as economic growth teetered near a 12 year low and a territorial dispute with Japan weighed on trade.

USA – Sale of previously owned US homes unexpectedly climbed in October showing record low mortgage rates are helping spur the world’s largest economy. Gains in house prices are boosting consumer finances and sentiment which in turn are underpinning the house spending that accounts for about 70% of the economy.

France – France lost its top credit rating at Moody’s Investors Service which also maintained a negative outlook for Europe’s second largest economy, citing what it called a worsening growth outlook. France was cut to Aa1 from Aaa. The Moody;s downgrade following one by Standard & Poor’s in January and increases pressure on President Francois Hollande to find was to bolster growth.

Bonds – A light rally on Monday as some market players who are speculating a rate cut at next week’s MPC came into the markets, still seeing some demand from offshore players and with the bond auction offering about N15bio less we might just see yields dip across board.

Bills – Relatively quiet day on Monday, the bills around 80-90 days were sold off, in the run up to the auction next week, we will likely see some more profit taking and market participants trying to go into the auction for higher yields.

Money Market – OBB and unsecured O/N rates eased to close at 11.00% & 11.50% as a liquidity injection came from maturing OMO bills

CBN WDAS – CBN offered and sold $200mio and maintained the marginal rate at 157.3075 (inc. the 1% commission).

Indicative Currency Exchange Rates
                               Bid            Offer
EURUSD             1.2788          1.2798
GBPUSD             1.5913           1.5923
USDJPY              81.31             81.71
USDCHF             0.9418          0.9438
GBPEUR             1.2443          1.2453
USDZAR             8.8462         8.9462
USDNGN           157.40           157.90
JPYNGN            1.9358           1.9858
CHFNGN           167.13           171.13
EURNGN           201.28          205.28
GBPNGN           250.47           254.47
ZARNGN           17.79              19.79

Tension in Middle East continues to escalate, with Israel deployed tanks near the border, threatening first ground invasion of Gaza. According to BP’s Statistical Review of World Energy, the region accounts for more than 35% of global crude production in 2011 as UN Secretary General Ban Ki-moon has arrived in Egypt today to help broker an end to this fighting.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N               14.1250      USD 1 month             0.2075
7 Day             14.5000     USD 2 month             0.2570
30 Day          14.7250      USD 3 month             0.3115
60 Day          14.9500      USD 6 month            0.5280
90 Day          15.7500       USD 12 month          0.8600
Y/Y Consumer Inflation September 2012 :         11.3%
FX Reserves: 15 November 2012 (USD bn)        43.37
MPR                                                                            12.00%
Source: Reuters Guardian, Bloomberg, Central Bank of Nigeria,
Financial Market Dealers Association Standard Chartered Bank Nigeria

                              Hi             Low            Close       Prev.Close
USD/NGN   157.98/08   157.70/80   157.95/05   157.35/45

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