September 26, 2017

New Oil Discoveries Threaten Nigeria’s Revenue, LCCI Warns

New Oil Discoveries Threaten Nigeria's Revenue, LCCI Warns... NAIJA INVEST

The Lagos Chamber of Commerce and Industry (LCCI) has warned that new oil discoveries across various countries pose threats to the nation’s revenue.

The President, LCCI, Mr. Goodie Ibru, explained that the United States of America, which is a major importer of Nigeria’s crude oil, is already devising means and methods towards becoming a net oil exporter.

Ibru, speaking during the chamber’s Q2 press conference on the economy, stated that the nation’s extreme dependence of government finances and external trade balances on proceeds from the sector could spell doom for the nation’s economy due to the evolving global oil markets.

“US Energy Information Agency (EIA) forecasts the US oil imports to 6mbpd, roughly a third of what it uses, by 2014 as the country moves closer to oil dependence by 2035,” he said.

In his words, “Over the fifteen-month period to July 2012, US crude oil imports from Nigeria dropped to about 333,000 bpd from over 1.1mbpd, displacing West African oil from the US market. This will probably put downward pressure on price due to greater competition.”

He pointed out that additional discovery in an offshore oilfield in Angola has been projected to make the country the largest producer in Africa, ahead of Nigeria.

According to him, the domestic and international issues facing the oil and gas sector pose both risks and opportunities for the Nigerian economy, adding that the greatest risk is the potential shock to fiscal sustainability if the global oil price slumps under the current challenges confronting the ability of Nigeria to expand oil output.

He therefore called for the urgent need to diversify the economy, as the risks to sustainability of current levels of oil prices are real. He said, going forward, the solution is to fix the structural problems in the economy, especially power, railways and the road network.

“All these are critical to enhancing efficiency, productivity and progress in other sectors of the economy such as manufacturing, agriculture, Information Communication and Technology (ICT), services and downstream oil and gas,” he said.

New Oil Discoveries Threaten Nigeria's Revenue, LCCI Warns... NAIJA INVEST

New Oil Discoveries Threaten Nigeria’s Revenue, LCCI Warns… NAIJA INVEST

He noted that the credit situation still remains a major problem for investors in the economy maintaining that as regards to previous review, retail lending rates was well above 22 per cent making many small and medium scale enterprises to face difficulties in accessing credit even at this high rate.

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IMAGES: www.telegraph.co.uk / www.tagoil.com

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