12 October 2014, Lagos – The International Monetary Fund (IMF) has ruled out any major shock in the Nigerian economy on the basis of the new oil policy of the United States that put an end to the importation of oil from Nigeria.
Speaking at a press conference on Saturday at the ongoing IMF/World Bank annual meetings in Washington DC, US Director, African Department and Senior Communications Officer of the fund, Antoinette Sayeh and Andrew Kanyegirire respectively, said the recent restructuring of the Nigerian debt had insulated the country from revenue reduction brought about by the stoppage of oil importation from Nigeria.
They noted that the oil industry was, indeed, changing, adding:“In the US, of course, Shale oil reserves are going to be brought into production. It will mean less of a US demand for oil exports from Nigeria and other countries. Nigeria’s exports to the US have already ceased, in oil, and from that, we don’t see any major impact on the economy in the growth.”
Sayeh particularly noted that given the fact that Nigeria had ceased to be a big borrower in recent times as a result of its recent debt restructuring, chances that it would be under intense pressure as a result of the US policy on oil are low.
Nigeria, he said, had, in fact, not been a big borrower in recent times as it benefited from a considerable debt restructuring 10 years ago and had not been borrowing any large amounts.”
The IMF chief said the seven per cent projection for Nigeria’s growth this year would not be affected by the new development, saying, “The prospects and outlook we see for Nigeria, currently, we’re still projecting some 7 per cent growth this year for Nigeria. I think the authorities have knocked that down to some 6.5 per cent based on some of their concerns about some of the security conditions also that they’re facing.
“But Nigeria’s outlook looks very robust. You may know that from the rebasing that Nigeria just recently did that the economy is, in fact, a lot more diverse than we had previously, all of us, thought. That the services sector is, indeed, a major one. Some 50 per cent of Nigerian GDP now is from the services sector. So a more diversified economy, for that reason, makes a country likely to be more resilient to shocks that may come from things like oil.
Nigeria became the first country to completely stop selling oil to the United States of America, the world’s largest oil producer and consumer, due to the impact of the shale revolution – an astounding reversal – as the country was only four years ago one of the top five oil suppliers to America.
According to the US Department of Energy, Nigeria did not export a single barrel of crude to US-based refiners in July for the first time since records started in 1973.
Preliminary data suggest the trend continued in August and September, the London-based Financial Times reported recently.
Many oil producers have seen their exports to the US drop as domestic production rises, thanks to the use of new technologies such as horizontal drilling and hydraulic fracturing, or fracking. But Nigeria is the first to fully stop exporting crude to that country. At its peak in February 2006, the US imported 1.3 million barrels per day (mb/d) from Nigeria – equal to roughly one super tanker the size of the Exxon Valdez every day. By 2012, Nigeria was just selling 0.5m b/d, but was still one of the top five suppliers to the US, alongside Saudi Arabia, Canada, Mexico and Venezuela. Earlier this year, sales dropped to a trickle of about 100,000 b/d. And in July, they completely stopped.
Nigeria, a member of the Organisation of the Petroleum Exporting Countries (OPEC) oil cartel, is Africa’s largest oil producer and international companies from ExxonMobil to Royal Dutch Shell and from Total to Chevron operate some of the country’s major oil fields. But most of them are divesting of these assets in the country, as they undertake a portfolio rotation of their assets to divert more resources in shale oil production.
The shale revolution has affected US oil suppliers unevenly, hitting particularly hard those in Africa such as Nigeria, Algeria, Libya and Angola, which produce high quality crude similar to the one pumped in the new oil fields of North Dakota.
– This Day