‘Banks aided most of oil and gas asset acquisitions in Nigeria since 2010’

nigeria-oilAccording to the report, crude oil export is a key source of foreign currency to Nigeria. (Image source: John/Flickr)A new report by Ecobank has revealed that Nigerian banks have financed over 80 per cent of oil and gas asset acquisitions that were concluded in the last five years in Nigeria

The report added that the oil and gas sector will see assets divestments of over US$10bn in 2015-2016.

Dolapo Oni, analyst at Ecobank, said, “There’s clearly a structural funding deficiency in the oil and gas sector as it currently depends on the balance sheet of the banking industry rather than equity funding provided by institutional investors.”

The analyst noted that the lower oil price environment could also sustain the downward trend in the country’s foreign reserves and exchange rate, which are dependent on the foreign currency earned by crude oil sales.

The report added, “The country already faces considerable difficulties in selling its crude oil cargoes with a persistent overhang for them since December 2014. The Nigerian National Petroleum Corporation (NNPC) has offered further discounts to push sales but increasingly faces lower price differentials. This is expected to redirect government attention to other revenue sources as it seeks to fill the gap in its revenue profile. Receipts from crude oil sales have traditionally provided over 67 per cent of government revenue.”

With the sharp drop in oil prices, the country could see a major reduction in oil revenues in 2015 compared to 2014 due to the much lower average oil price anticipated this year, concluded the analyst.

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