Maikanti Baru, Group Managing Director, Nigerian National Petroleum Corporation (NNPC), said the corporation has concluded arrangement to mobilise heavy and sophisticated equipment to resume oil exploration in the Lake Chad Basin of Borno State in the next six weeks.
Baru disclosed this when he visited Governor Kashim Shettima at the Government House in Maiduguri on Monday.
Baru was represented at the occasion by the NNPC Chief Operations Officer, who is also the Executive Director, Gas and Power, Saidu Mohammed.
The current administration of President Muhammadu Buhari has made search for hydrocarbons in the Lake Chad Basin top priority where it has committed a whopping N39.4 billion in the 2016 budget.
Previous governments spent about $340 million and additional N27 billion in seismic expeditions before the current speed of financial allocation for the same purpose.
Baru said the resumption of exploration was based on the military’s assurance to provide adequate security.
Baru explained that the move was due to the present relative peace in the state and the degrading of Boko Haram insurgents in the North East region.
“We are here in Borno to express our full alignment to the ongoing reconstruction, rehabilitation and resettlement process by government in all the liberated communities.
“Therefore, NNPC wants to appeal and seek where it can come in and assist because the rate of devastation is worrisome.
“We are also in the state to inform you that in the next six weeks, we are going to redeploy our team of experts back to Maiduguri to resume oil exploration with better technology in the Lake Chad Basin.
“This is necessary with our renewed efforts in harnessing oil, gas and power to increase the economy of the nation in line with the agenda of President Muhammadu Buhari on job creation and economic diversification,” Baru said.
Responding, Shettima commended the team for the visit and the NNPC’s resolve to resume oil exploration in the region.
The governor said his administration would partner with NNPC to actualise the mission.
According to him, the oil and gas, if found, will not only generate revenue but create employment opportunities for the people across the country, particularly the North East region.
Shettima, therefore, appealed to NNPC to assist the state government in reconstructing and rebuilding thousands of schools, and other facilities and infrastructure destroyed by insurgents.
He stressed that the education sector remained the only means of fighting poverty associated with emergence of Boko Haram.
Meanwhile, as recent developments in Nigeria have shown that the economy is on its way out of recession, there are, however, indications that the much anticipated recovery may be hindered by a combination of drop in oil price and government’s decision on fuel price and electricity tariff.
Analysts at FSDH Merchant Bank expressed this fear in their monthly economic and financial market outlook for May titled, ‘Nigerian Economy Gathers More Momentum’.
The Bonny Light oil price has dropped below $50 per barrel.
Year-on-year, the Food Price Index (FPI) increased by 18.44 percent in March 2017, from 18.53 percent in February 2017. The FPI was driven by higher prices of bread; cereals; meat; fish; potatoes; yams and other tubers; and wine. The Core Index increased by 15.40 percent in March 2017, lower than 16 percent recorded in February 2017.
In March 2017, the largest increase in the Core Index was recorded in the electricity; solid fuels; clothing and other articles of clothing; liquid fuel; spirits; and fuels and lubricants for personal transport equipment.
“Although we expect the inflation rate to trend downward, the level of drop will depend on Federal Government’s decision on fuel price and electricity tariff. We estimate that the inflation rate would be at 17.11 percent in April 2017. This may impact the yields on the fixed income securities”, the analysts said.
The 30-day movement average of the external reserves increased by 1.85 percent to $30.86 billion as at end-April 2017 from $30.30 billion at end-March 2017. The average external reserves stood at $30.54 billion in April 2017, from $30.17 billion in March 2017.
“We note that the current Bonny Light oil price has dropped below $50 per barrel and could threaten the sustainability of the accretion to the external reserves. However, the fact that crude oil production remains strong in Nigeria should make up for the drop in the oil price in the short-term. The increase in the external reserves led to an appreciation in the average foreign exchange rate at the parallel market”, the analysts said.
According to data from Reuters, the Bonny Light crude oil price decreased by 2.94 percent to US$51.16/b as at April 28, 2017 from end-March 2017.
The average price of Bonny Light was US$52.75/b in April 2017, an increase of 1.05 percent from the average price of US$52.20/b recorded in March 2017. According to the U.S Energy Information Administration (EIA), the Brent crude oil price should average US$54/b in 2017 and US$57/b in 2018.
It added that the CBN increased the supply of foreign exchange in the foreign exchange market to meet genuine demand.
“The consistent accretion to the external reserves improved the ability of the CBN to increase supply. This has led to relative stability in the inter-bank market and an appreciation in the parallel segment of the foreign exchange market. The CBN has also introduced the Investors, Exporters and End-Users Foreign Exchange Window to accommodate all foreign exchange obligations. This is to boost liquidity in the foreign exchange market and ensure timely execution and settlement for eligible transactions.”
“The current stability in the value of the naira is mainly because of improved external reserves from oil receipt. The long-term stability of the value of the naira is dependent on the availability of multiple sources of supply of foreign exchange into the Nigerian economy.
The creation of a conducive business environment from improved and sustained adequate infrastructure is important for the value of the naira. The harmonisation of the monetary, fiscal and trade policy will also improve the business environment”, the report added.
Matthew Ogagavworia, a business advisor, said the government needs to set its priority right by applying more energy in the right direction if the desired goal of exiting recession is going to be achieved.
“All these noise we are making about economic recovery can be achieved only if we all play our roles. The government, all its apparatus and the people have roles to play here. One thing that is important is that the government must continue to sustain locally made good production as substitute to foreign ones”, he said.
Cyril Amkpa, an Abuja-based economist, said the country should be thinking of what will happen after the intervention of CBN in the foreign exchange market ends.
“I am not one of those that will say the CBN intervention in the forex market will continue. It will soon end because the bank does not have the ability to keep it on for a long time. Like what I have said at different forums, the country should braze up for life after CBN’s forex intervention and this may affect the recovery from economic recession”, Ampka added.