Nigeria faces further revenue slump as Iran returns to oil market

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Nigeria’s dwindling oil revenue is expected to fall further as Iran is set to commence immediate exports of at least 500,00 barrels of crude oil per day (bpd) following the lifting of international sanctions against the country at the weekend, thus worsening the oil glut in the global market.

The federal government’s 2016 budget, which is predicated on an oil price of $38 per barrel, is already under threat as crude oil prices fell below $30 last week due to an estimated 1.5mbpd excess inventory in the oil market.

With the lifting of sanctions against Iran, the additional one million barrels per day that the country is expected to add to the global market this year will depress prices further, thus worsening Nigeria’s already precarious economic situation.
The United Nations Nuclear Agency on Saturday certified that Iran had met all of its commitments to curb its nuclear programme, and the United States immediately revoked sanctions that had slashed Iran’s oil exports by around 2mbpd since their pre-sanctions 2011 peak to a little more than 1mbpd.
There were strong feelers a month ago that the removal of sanctions would occur earlier than oil traders initially expected.
This fuelled a sell-off which sent the price of Brent crude tumbling 24 per cent since the beginning of the year, the biggest fall since the financial crisis of 2008.

Iran has said that it hopes to increase its post-sanctions crude exports by around 1mbpd within the year.
UK-based Independent newspaper reported yesterday that Iran was set to flood the oil market with 500,000bpd after international sanctions were lifted in a move that has been hailed by the country’s president as a “golden page” in its history.
President Hassan Rouhani was quoted as saying that the deal “opened new windows of engagement with the world” and the country should “get ready to seize the opportunity to make an economic leap and development”, while speaking in Parliament yesterday.

Hours after sanctions imposed by US, UN and the EU on Tehran were lifted – thereby removing the obstacle to exports – the Deputy Oil Minister, Amir Hossein Zamaninia, announced that his country was ready to increase its crude oil exports by 500,000bpd.
“With consideration to global market conditions and the surplus that exists, Iran is ready to raise its crude oil exports by 500,000 barrels a day,” Zamaninia was quoted as saying by the Shana news agency.
Already there are some 38 million barrels of oil in Iran’s floating reserves ready to enter the market, according to the International Energy Agency (IEA).

Rouhani said Iran should use the expected influx of money and investments following the end of sanctions to spark the “economic mutation” of the country, creating jobs and enhancing the quality of life for Iranian citizens, after the country suffered double-digit inflation and high unemployment rates for years.

Rouhani said his country needs up to £35 billion in foreign investment annually to reach its goal of 8 per cent annual growth.
More than £21 billion in assets overseas were understood to become immediately available to the Islamic republic, while official Iranian reports have set the total amount of frozen Iranian assets overseas at £70 billion.
But as Iran prepares to re-enter the oil market, Nigeria’s problems may be compounded by fears of rising militant attacks on oil installations in the Niger Delta.

A few hours before a Federal High Court in Lagos ordered the arrest of former militant, Mr. Government Ekpemupolo, also known as Tompolo, who is being prosecuted by the Economic and Financial Crimes Commission (EFCC) on allegations of corruption and money laundering, the Escravos gas pipeline operated by US multinational, Chevron, was blown up in the Niger Delta.
The attack on the pipeline was blamed on Tompolo who has denied the corruption allegations and threatened to go to war against the federal government if it prosecutes him.

Since the EFCC launched the probe in the award of contracts by the Nigerian Maritime Administration and Safety Agency (NIMASA) to Tompolo and his company, Global West Vessel Specialist Limited, among others, he has refused to honour the invitation of the EFCC.
He also failed to turn up for his arraignment at the court last week, compelling the presiding judge, Justice Ibrahim Buba, to issue a bench warrant for his arrest.

In a bid to stem further attacks on oil installations, troops of the military Joint Task Force (JTF) in the Niger Delta, termed Operation Pulo Shield, yesterday stormed some Ijaw communities especially the coastal settlements comprising Gbaramatu Kingdom in Warri South-West, Delta State, in search of Tompolo and other militants.

According to residents in the community, Kurutie, an island near Okerenkoko, as well as Okpelama and Oporoza communities, were also allegedly invaded by the military search team, which was said to have stormed the communities at about midnight yesterday.
Okporoza, which is the traditional headquarters of the oil-rich Gbaramatu Kingdom, is the home of Tompolo, who is one of the most influential community leaders in the kingdom.

However, sources said some of the youths allegedly hired to carry out the attacks on the Chevron oil installation were believed to hail from Okpelama, lending credence to the observation that the soldiers might have come in search of the culprits based on intelligence reports.

Although there was no independent confirmation of the nature of the military operation in the Ijaw coastal communities, THISDAY learnt that the soldiers kept surveillance on Kurutie and Oporoza.
Many residents were reported to have begun moving out of the area into nearby swampy forests after the sudden appearance of the soldiers.

A source said palpable anxiety enveloped the area yesterday, as residents still remember vividly the devastating invasion of Okporoza, Okerenkoko and other Gbaramatu communities by Nigerian soldiers in 2009 at the peak of militancy in the Niger Delta.
A source alleged that soldiers forced their way into homes during the invasion, “probably in search of arms and those responsible for the attacks on the pipelines belonging to Chevron and the Nigerian Gas Company (NGC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC)”.

 

Community leaders yesterday expressed shock and disbelief at the military invasion on their communities and homes, maintaining that they were innocent of the reported attacks on the facilities.
“At the moment, my community is practically a ghost town; the people are running away to Warri and other places in the swamps,” a community leader said, adding that the soldiers did not talk to anyone about their mission in Gbaramatu.
Meanwhile, Tompolo has blamed a chieftain of the All Progressives Congress (APC) and governorship candidate of the just-concluded Bayelsa election, Mr. Timipriye Sylva, for the attack on the Escravos pipeline.

Tompolo, in an open letter to President Muhammadu Buhari yesterday further alleged that “a few young men” from his own local government area in Delta State have been aiding and abetting Sylvia, who decamped from the Peoples Democratic Party (PDP) on whose platform he once served as the Bayelsa State governor.
He claimed that the said “young men” were among the local politicians who defected to the APC from the PDP shortly after the 2015 presidential election in the country.
He also alleged that an unnamed legal counsel to the EFCC was an accomplice in the renewed attacks and destruction of oil facilities in the region.

In the letter titled, “Beware of Some of Your Party Members in Bayelsa and Delta States,” Tompolo also addressed the EFCC probe.
He said: “I wish to inform you that it has come to my knowledge that the leader of your party and governorship candidate of the All Progressives Congress (APC) in Bayelsa and a few young men from Warri South-West Local Government Area of Delta State, who joined the party from the Peoples Democratic Party (PDP) after the 2015 presidential election are hell bent on linking me to the renewed vandalisation (sic) of oil facilities in the Niger Delta region; whereas they are the ones carrying out the act to smear my name.
“They are doing this in connivance with the Economic and Financial Crime Commission (EFCC) lawyer, who is also a member of your party, and is at the forefront of prosecuting me because I refused to buy property from him.

“The crux of this letter is to let you know them that they are dubious, mischievous, desperate, pretentious, manipulative and corrupt; and, therefore, do not share the same vision and mission with you, as well as do not believe in good governance.
“I will briefly tell you some of their antecedents in this letter. The leader of your party in Bayelsa State approached me shortly after my meeting with you in Abuja, that I should accompany him to meet you and plead for him to be appointed as Special Adviser and Chairman of the Presidential Amnesty Programme Committee, which I refused to do because of his antecedents, as being not a reliable and trustworthy person.

“It was thereafter he forced his way into the governorship election of the state, which almost tore the state apart with violence, beginning with the party primary in which he demonstrated a high level of desperation as was recounted by the chairman of the committee and Governor of Edo State, Comrade Adams Oshiomhole.
“As for the members of the party from my local government area, Warri South-West, they have been involved in illegal bunkering and oil theft activities over the years, which I have been fighting against because of love for (my) country. They know me as a no nonsense person.

“There is this particular one from the same Gbaramatu Kingdom with me that had sworn to kill me because I refused to manipulate the ascension to our traditional stool in his favour when he was not even qualified for it. And so, he looked for any opportunity to deal with me.
“As for the EFCC lawyer, he approached me some years back that I should come to Abuja and Lagos to buy some choice property worth billions of naira from him. I told him that I do not have such money to buy property. Besides, I was not interested in holding property in Abuja and Lagos, except in my village.
“Since then he has been looking for any opportunity to drag me into matters I do not know anything about. And this is one of the reasons why I have not appeared in the court because he is not qualified to prosecute me.

“The truth of the matter is that I do not know anything about the N34 billion EFCC is talking about. First, it was a N13 billion issue, now it is N34 billion. I am not a signatory to any of the companies mentioned in the said N34 billion case, so I do not know where this one is coming from. I know that God in His infinite mercy will see me through in this critical moment.”
However, the commander of the JTF, Major-General Alani G. Okunola, yesterday read the riot act to oil installation vandals while addressing journalists at Egwa II community in Warri South-West Local Government Area when he led his troops to inspect one of the blown pipelines.

He said Pulo Shield would henceforth hold community leaders where such bombings take place responsible for any acts of economic sabotage in their domain.
Okunola also vowed to bring the saboteurs of the national assets to book, saying his men were closing in on the criminals.
“Henceforth the extant law banning the use of outboard engines with 200 HP and above will be enforced,” he said, warning that the federal government would not condone any act of sabotage in the country.

He also appealed to government officials and community leaders to give JTF and other security agencies in the region useful information that would lead to the arrest of the perpetrators of the pipeline explosion for prosecution.
He said: “It was blown up three days ago. We are going to fish out those responsible. It was a massive sabotage and critical to national assets. There is no way we will fold our hands and allow the perpetrators to get away with it. We did not have our men deployed in the area, that is why they had the opportunity to do it.”

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