A Review of the Nigerian Energy Industry

Financial market update

21 December 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The National Assembly has unanimously adopted a $79 per barrel oil price benchmark, as against $75 per barrel recommended in the 2013 budget proposal sent to the lawmakers by President Goodluck Jonathan. The new price benchmark and crude oil production target adds approximately N587bn to the Federal Government projected revenues in 2013, cutting the budget deficit by half. Analysts have however warned that the higher benchmark would expose the nation to the downside risk in crude oil prices. [BusinessDay]

UK: U.K. banks, under pressure from the Bank of England to increase capital, may do exactly what the central bank doesn’t want them to do: Cut lending. Britain’s four-biggest banks may need as much as 60 billion pounds in extra capital to meet future loan losses, compensate customers and pay regulatory fines, according to the Bank of England’s Financial Stability Report last month. Central bank Governor Mervyn King is pressing banks to raise capital levels without reducing lending to support an economy struggling to avoid a triple-dip recession.

INDIA: Indian stocks dropped for a second day, erasing a weekly advance. Lenders and materials producers led the declines. The BSE India Sensitive Index, or Sensex, fell 0.6 percent to 19,335.49 at 10:31 a.m. in Mumbai. The gauge had climbed to its highest level since April 2011 on Dec. 19.

CHINA: China’s stocks fell from a four- month high, paring a third weekly gain, on concern a rally that has lifted shares from an almost four-year low is excessive. The Shanghai Composite Index retreated 0.7 percent to 2,153.31 at the close, trimming this week’s gain to 0.1 percent. It finished at the highest since Aug. 10 yesterday.

Bonds – Market remained quiet yesterday as the holiday season kicks in. Post the auction on Wednesday yields inched up slightly yesterday to mirror the auction cutoffs on the offer. Market settled early on and was stable to close.

Bills – Quiet market, OMO auction announcement led to some selling.

Money Market – OBB and unsecured O/N rates stable today at 10.00% and 10.25% as the market remains liquid.

Indicative Currency Exchange Rates
Bid            Offer

EURUSD           1.3195           1.3205
GBPUSD           1.6246          1.6256
USDJPY             83.99           84.39
USDCHF           0.9142          0.9162
GBPEUR           1.2310          1.2320
USDZAR           8.5236         8.6236
USDNGN          157.02          157.52
JPYNGN           1.8695          1.9195
CHFNGN          171.76           175.76
EURNGN          207.19          211.19
GBPNGN          255.09          259.09
ZARNGN          18.42             20.42

Oil declined the most in more than two weeks on concern U.S. lawmakers may fail to avert spending cuts and tax increases that threaten the economy of the world’s biggest crude consumer. Crude for February delivery fell as much as $1.20 to $88.93 a barrel in electronic trading on the New York Mercantile Exchange and was at $89.33 at 2:48 p.m. Singapore time.

Interest rates
NIBOR (%)                   LIBOR (%)

O/N              10.5833      USD 1 month          0.2107
7 Day            10.9583      USD 2 month         0.2540
30 Day         11.9583       USD 3 month         0.3100
60 Day         12.3750       USD 4 month        0.3636
90 Day         12.8333       USD 6 month        0.5102
USD 12 month      0.8430
Y/Y Consumer Inflation August 2012 :           12.3%
FX Reserves: 28 September 2012 (USD bn)  44.453
MPR                                                                         12.00%
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market
Dealers Association Standard Chartered Bank Nigeria

                           Hi            Low          Close        Prev.Close
USD/NGN 157.75/85   157.00/10   157.27/37   157.80/90

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