A Review of the Nigerian Energy Industry

Financial market update

05 December 2012, Sweetcrude, Lagos – Local and international financial market update.
Nigeria – Nigeria holds talks with Shell, Exxon Mobil and other energy companies to reach an agreement on tax demands proposed in draft legislation. The country is seeking to increase its share of profits to 73% from 61%, said Diezani Alison Madueke. The government claims that extraction laws going back to 1993 are based on crude at USD20 per barrel and unrealistic prices at that time. The Petroleum Industry Bill is aimed at increasing the country’s share of profits from oil pumped off its shores

USA – Barak Obama is hardening his stance in his first post election confrontation with Republicans declaring hi will make no deal on the country’s tax rate increases on top earners. He is however ready to make concession to Republican House speaker John Boehner’s calls for cuts to entitlement programs such as Medicare Health Insurance for the elderly. The president at this point is standing firm on need to increase taxes on the top 2% of the US tax payers.

China – China may have inflation of 2.6% this year according to an article by Sheng Shongcheng, head of PBOC statistics department. They also wrote, “the yuan is unlikely to appreciate substantially in the future because it is already close to the equilibrium level, China GDP would still take more than 20 years of consistent effort to catch up the US, China’s target of doubling GDP and per capital income, between 2010 and 2020 are feasible and pragmatic”

India – India’s service industries expanded at the slowest pace in 13 months in November based on a private survey signaling demand remains subdued. India PMI also fell to 52.1 from 53.8 in October. A number above 50 indicates growth. The USD1.8 trillion economy which is Asia’s third largest may expand at the weakest pace in a decade based on International Monetary Fund Data.

Bonds – Another relatively quiet market, rates inching downward as there still appears to be some demand feeding into the markets.

Bills – Quiet session for the most part though some demand went into the 90-180 day part of the curve ahead of the auction today. The long end still remains untouched as yields have been knocked down.

Money Market – OBB and unsecured O/N rates stable on Tuesday at 11.00% and 11.25% ”

Indicative Currency Exchange Rates
                        Bid             Offer                                                                                                            EUUSD      1.3111          1.3121
GBPUSD    1.6104         1.6114
USDJPY    82.26           82.66
USDCHF    0.9258       0.9278
GBPEUR    1.2282        1.2292
USDZAR   8.7979       8.8979
USDNGN   157.05      157.55
JPYNGN   1.9092       1.9592
CHFNGN   169.64       173.64
EURNGN  205.91       209.91
GBPNGN   252.91       256.91
ZARNGN  17.85          19.85

Rejection of Republican budget plan and rising gasoline stockpiles saw oil prices dipped for the first time in the week. WTI was at $88.39/bbl (-$0.11) while Brent fell $1.08 to $109.84. The WTI-Brent benchmark premium closed lower at $21.34 yesterday.

Interest rates
NIBOR (%)                   LIBOR (%)
O/N               12.0000  USD 1 month         0.2130
7 Day           12.5000   USD 2 month         0.2580
30 Day        13.0000   USD 3 month         0.3105
60 Day        13.6667    USD 6 month         0.5250
90 Day        14.0417    USD 12 month      0.8590
Y/Y Consumer Inflation October 2012 :       11.70%
FX Reserves: 30 November 2012 (USD bn) 44.47
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     157.15/25  156.85/95  156.97/07  157.05/15

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