A Review of the Nigerian Energy Industry

Financial market update

Financial-market19 July 2013, Lagos – Local and international financial market products and services update.
NIGERIA: Nigeria’s businessman Tony Elumelu is negotiating with several oil majors to buy two onshore oil and gas assets he will use to fire power plants that are part of his $2.5 billion investment pledge to U.S. President Barack Obama’s Africa Power initiative. Several oil majors, including Chevron, Royal Dutch Shell, Petrobras and ConocoPhilips are expected to this year divest multiple assists onshore or in the shallow waters of the Niger Delta, continuing a trend that started two years ago.

Elumelu’s plans are key part of government’s move to get its decrepit power sector into private hands and end chronic power shortages seen as the main break on Africa’s second biggest economy.

EUROPE: European stocks fell, paring the fourth weekly gain for the Stoxx Europe 600 Index, as investors weighed worse-than-estimated earnings from Google Inc. to Microsoft Corp. U.S. futures were little changed, while Asian shares dropped. The Stoxx 600 lost 0.3 percent to 298.96 at 8:10 a.m. in London. The gauge is still heading for a weekly gain of 0.9 percent as Federal Reserve Chairman Ben S. Bernanke said the central bank remains flexible on the pace of asset purchases.

INDIA: The volatility in the Indian rupee is the “immediate cause of worry” as the government seeks to revive economic growth from the slowest pace in a decade, Prime Minister Manmohan Singh told businessmen today. Listing the steps his government has already taken to curb the record current-account deficit, he said more measures to lure foreign direct investment are on the anvil and told investors not to be overwhelmed by “negative sentiments” about Asia’s third-largest economy.

BONDS: A bullish session today as the drop in inflation continued to fuel a rally in the markets. Though the auction closed higher than expectation, the securities offered quickly adjusted closer to mirror secondary market sentiment. Volatile markets ahead as the markets try to inject more liquidity in the 15s and 30s in the secondary market.

BILLS: With the FAAC payment coming yesterday the CBN came out to offer N140 billion in 182 and 210 day bills selling about N174billion at 13.15 &13.18% respectively. The secondary market was relatively bullish though it slowed somewhat due to the OMO auction where a significant amount of demand went.

MONEY MARKET: OBB and unsecured O/N rates closing up400bps to 10.15% and 10.25% respectively FAAC of approximately N350billion came into the system which helped to improve liquidity.

COMMODITIES: WTI crude traded near the highest price in 16 months and was poised for a fourth weekly gain on signs the U.S. economic recovery may be sustainable. WTI’s discount to Brent shrank to the narrowest since October 2010. WTI for August delivery was at $107.93 a barrel, down 11 cents, on the New York Mercantile Exchange at 2:55 p.m. Singapore time.

Indicative Currency Exchange Rates
Bid        Offer
EURUSD      1.3130      1.3140
GBPUSD      1.5239      1.5249
USDJPY       100.27      100.67
USDCHF     0.9419      0.9439
GBPEUR      1.1606      1.1616
USDZAR      9.9000    10.0000
USDNGN     160.80     161.30
JPYNGN      1.6037      1.6537
CHFNGN     170.72      174.72
EURNGN     211.13       215.13
GBPNGN      245.04     249.04
ZARNGN       16.24        18.24

Commodities
WTI crude traded near the highest price in 16 months and was poised for a fourth weekly gain on signs the U.S. economic recovery may be sustainable. WTI’s discount to Brent shrank to the narrowest since October 2010. WTI for August delivery was at $107.93 a barrel, down 11 cents, on the New York Mercantile Exchange at 2:55 p.m. Singapore time.

Interest rates
NIBOR (%)                       LIBOR (%)

O/N              10.2417            USD 1 month        0.1915
7 Day            10.5000          USD 2 month       0.2315
30 Day         10.7500           USD 3 month       0.2662
60 Day         11.0000           USD 4 month       0.3126
90 Day         11.2500            USD 6 month       0.3980
USD 12 month     0.6809
Y/Y Consumer Inflation June 2013 :              8.4%
FX Reserves: 17 July 2013 (USD bn)           46.923
MPR                                                                    12.00%
Source: FMD and CBN
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

Fx
Hi              Low         Close        Prev.Close
USD/NGN
    161.60/70   161.08/18   161.20/30   161.45/55

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