A Review of the Nigerian Energy Industry

Financial market update

06 April 2013, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The Nigerian National Petroleum Corporation, NNPC Group Managing Director, Mr Andrew Yakubu, said Nigeria will rake-in about $10 billion as Foreign Direct Investment, FDI, from gas-based industries as a result of government’s determined efforts to position the gas sector for aggressive growth. He said that Nigeria is transiting from an essentially oil based country to an integrated Oil and Gas one. According to him, Nigeria has a total gas reserve of 187 Trillion Cubic Feet (TCF) with potential to grow to as high as 600 TCF, and this positioned the country as Seventh among countries with natural gas reserves.

EUROPE: The European Central Bank will keep the key interest rate at a record low of 0.75 per cent, ECB President Mario Draghi said at an April 4 press conference in Frankfurt following the monthly meeting of the ECB’s governing council. However, the ECB might lower interest rates if Europe’s economy gets worse. Europe’s economic weakness has extended in the early part of 2013 but gradual recovery is expected for the second half of 2013, Draghi told reporters.

INDIA: India has taken steps to remove curbs on domestic sugar supplies after months of debate as the world’s second-biggest producer hopes to iron out sharp swings in output that have triggered volatility in global prices. India, the biggest sugar consumer, will no longer force mills to sell sugar to the government at a discount and will not limit the amount they can sell in the open market, Food Minister K.V Thomas told journalists on Thursday after the cabinet agreed the changes.

CHINA: China’s central bank has warned of uncertainty in future inflation levels while saying the country has maintained steady economic growth, according to a People’s Bank of China (PBOC) statement on Wednesday. Due to rising food prices during the Spring Festival season, China’s annual consumer inflation rate rebounded to a 10- month high of 3.2 per cent in February, according to data from the National Bureau of Statistics.

Bonds – A bearish session to start yesterday morning, some correction of the overdone downward dip in yields seen two days ago. Some retracement on the day seen from midday but yields still closed up an average 6bps.

Bills – Bullish in the bill markets on Thursday as a liquidity injection from maturing bills hit the market thereby creating demand. The CBN were out to offer OMO bills to try and mop up this liquidity. The CBN sold 93.529billion in 105 & 133 day bills at 11.75% & 12.00% respectively.

Money Market – OBB and unsecured O/N rates at 10.15% and 10.25% respectively. Market still liquid, it received a boost of about N252billion through a bill maturity yesterday.

Indicative Currency Exchange Rates
Bid         Offer

EURUSD    1.2908       1.2918
GBPUSD    1.5205        1.5215
USDJPY     96.26          96.66
USDCHF    0.9423       0.9443
GBPEUR    1.1781         1.1791
USDZAR     9.1577        9.2577
USDNGN    157.05       157.80
JPYNGN     1.6315        1.6815
CHFNGN    166.67       170.67
EURNGN    202.72      206.72
GBPNGN    238.79      242.79
ZARNGN    17.15          19.15

Crude in New York traded near a two- week low and headed for its biggest weekly drop since September after U.S. inventories climbed to a 22-year high, raising concern
slower economic growth may be weakening fuel demand.
WTI for May delivery was at $93.09 a barrel in electronic trading on the New York Mercantile Exchange, down 17 cents, at 2:07 p.m. Singapore time.

Interest rates
NIBOR (%)                       LIBOR (%)

O/N              10.5000       USD 1 month           0.2003
7 Day            10.8333       USD 2 month           0.2403
30 Day         11.1250         USD 3 month          0.2804
60 Day         11.5833         USD 4 month          0.3276
90 Day         11.8333         USD 6 month          0.4424
USD 12 month        0.7230
Y/Y Consumer Inflation February 2013 :      9.5%
FX Reserves: 28 March 2013 (USD bn)        48.573
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     158.05/15     157.40/50      157.50/60     157.95/05

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