11 Jul

Daily Watch – OPEC seeks Nigeria cut, Sayonara Etisalat

  • Libya and Nigeria, which have both boosted oil production since they were exempt from global cuts this year, may be asked to cap their crude output soon in an effort to help re-balance the market, Kuwait Oil Minister Issam Almarzooq said. OPEC and non-OPEC producers have invited the two African countries to their committee meeting in St. Petersburg, Russia, on July 24 to discuss the stability of their production, Almarzooq said on the sidelines of an energy conference in Istanbul. Almarzooq is chairman of the committee monitoring the compliance of OPEC and non-OPEC suppliers with output cuts that started in January and have been extended to March. “We invited them to discuss the situation of their production,” Almarzooq said. “If they are able to stabilise their production at current levels, we will ask them to cap as soon as possible. We don’t need to wait until the November meeting to do that,” he said, referring to the upcoming OPEC meeting scheduled for November 30. Crude sank into bear territory last month amid concerns the cutbacks by OPEC producers, Russia and other allies are being partially offset by a rebound in supply by Libya, Nigeria and U.S. shale output. Libya and Nigeria were both exempt from the cuts due to their internal strife. Libya’s oil output has climbed to more than 1 million barrels a day for the first time in four years. Nigeria’s production rose 50,000 barrels a day in June, according to a Bloomberg survey.
  • Telecoms group Etisalat has terminated a management agreement with its Nigerian arm and given the business time to phase out the Etisalat brand in Nigeria, the chief executive of Etisalat International told Reuters. Nigerian regulators intervened last week to save Etisalat Nigeria from collapse after talks with its lenders to renegotiate a $1.2 billion loan failed. Etisalat, with a 45 percent stake in the Nigerian business, said in June it had been ordered to transfer its shares to a loan trustee after the talks had failed. Etisalat International CEO Hatem Dowidar said all UAE shareholders of Etisalat Nigeria, including state-owned investment fund Mubadala, had exited the company and left the board and management. Discussions were ongoing with Etisalat Nigeria to provide technical support, he said, adding that it could continue to use the brand for another three weeks before phasing it out.
  • Nigeria’s currency window for investors and exporters has traded around $3.83 billion since it was established on April 24, traders said on Monday, with the naira trading more strongly than on the black market. The window, where buyers and sellers are free to agree on an exchange rate, was introduced in April to try to attract foreign investors into the country and boost the supply of dollars. Traders said $407 million was traded last week compared with $354.8 million in the previous week, indicating a gradual return in investors’ confidence in Nigeria’s foreign exchange market. “We have seen continuous improvement in dollar inflow into the market in recent time from offshore investors and this has also reflected in the volume of transactions at the equity market,” one currency trader told Reuters. Before the window was introduced, the CBN was the main supplier of hard currency on the interbank forex market, after foreign investors fled naira assets in the wake of an oil price slump in 2014. A CBN spokesman last month said the bank was, on average, responsible for less than thirty percent of trading in the investor market. The window, however, has effectively introduced yet another exchange rate to the five already in operation. These include a retail rate set by licensed exchange bureaus, as well as official and black market rates.