Identifier
Created
Classification
Origin
09ABUJA1455
2009-08-06 10:17:00
UNCLASSIFIED
Embassy Abuja
Cable title:
NIGERIA: NIGER DELTA CRISES HITS EXTERNAL RESERVES AND
how-toVZCZCXRO6149 PP RUEHMA RUEHPA DE RUEHUJA #1455 2181017 ZNR UUUUU ZZH P 061017Z AUG 09 FM AMEMBASSY ABUJA TO RUEHC/SECSTATE WASHDC PRIORITY 6773 INFO RUEHOS/AMCONSUL LAGOS 1793 RUEHZK/ECOWAS COLLECTIVE RUEATRS/DEPT OF TREASURY WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS ABUJA 001455
SIPDIS
DEPT PASS TO USTR-AGAMA
TREASURY FOR PETERS AND IERONIMO
DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ANESA/DHARRIS
E.O. 12958: N/A
TAGS: EFIN ECON PGOV NI
SUBJECT: NIGERIA: NIGER DELTA CRISES HITS EXTERNAL RESERVES AND
THE NAIRA
UNCLAS ABUJA 001455
SIPDIS
DEPT PASS TO USTR-AGAMA
TREASURY FOR PETERS AND IERONIMO
DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ANESA/DHARRIS
E.O. 12958: N/A
TAGS: EFIN ECON PGOV NI
SUBJECT: NIGERIA: NIGER DELTA CRISES HITS EXTERNAL RESERVES AND
THE NAIRA
1. (SBU) Summary. Despite the recovery of oil prices in the
international markets, the crisis in the Niger Delta has dealt a
blow on Nigeria's foreign exchange reserves. Local press reports
that current production has fallen to about 1.3 million barrels per
day, a far cry from the 2.209 mbpd target of the 2009 Budget. Lost
production has led to a drop in Nigeria's foreign exchange reserves
and thus the value of the naira. End Summary.
Niger Delta Crisis Leads to Lower Oil Production
-------------- ---
2. (SBU) Nigeria's economy depends largely on oil exports,
accounting for about 80 percent of its revenues and about 90 percent
of its foreign exchange earnings. Militant activities in the Niger
Delta have resulted in the sabotage of oil pipelines and recurring
production shut-ins. The GON's budget for 2009 has a target of
2.209 mbpd, but oil production has been far short of this target
since the beginning of the year.
3. (SBU) When he signed the 2009 national budget in March, President
Yar'Adua noted that oil production had dropped to 1.6 mbpd and
acknowledged that this decline posed a challenge to budget
implementation. Local media reports that since then oil production
has dipped to about 1.3 mbpd, mostly as a result of an offensive by
the Joint Military Task Force in the heart of the Niger Delta that
triggered over 30 attacks on oil facilities by militants between May
15 and June 15. The fall in oil revenue has forced the GON to tap
its Excess Crude Account (ECA),which was intended to serve as a
sovereign wealth fund, to make allotted oil revenue disbursements to
the three tiers of government.
Naira Depreciates Due to Decline in External Reserves
-------------- --------------
4. (U) Lower revenues and foreign exchange reserves arising from
production shut-ins have undercut the value of the naira. According
to the Central Bank of Nigeria (CBN),foreign reserves dipped from
$53 billion at the end of December 2008 to $43.19 billion on July 3,
2009. The CBN's attempt to defend the naira by using foreign
reserves is unsustainable, which pushed down the naira from 146.72
naira/dollar on July 21 to naira 150.25/dollar on August 3.
Recently, dollar demand at the recently re-introduced Wholesale
Dutch Auction System (WDAS) has outstripped supply.
5. (U) This report was coordinated with Consulate Lagos.
SANDERS
SIPDIS
DEPT PASS TO USTR-AGAMA
TREASURY FOR PETERS AND IERONIMO
DOC FOR 3317/ITA/OA/KBURRESS AND 3130/USFC/OIO/ANESA/DHARRIS
E.O. 12958: N/A
TAGS: EFIN ECON PGOV NI
SUBJECT: NIGERIA: NIGER DELTA CRISES HITS EXTERNAL RESERVES AND
THE NAIRA
1. (SBU) Summary. Despite the recovery of oil prices in the
international markets, the crisis in the Niger Delta has dealt a
blow on Nigeria's foreign exchange reserves. Local press reports
that current production has fallen to about 1.3 million barrels per
day, a far cry from the 2.209 mbpd target of the 2009 Budget. Lost
production has led to a drop in Nigeria's foreign exchange reserves
and thus the value of the naira. End Summary.
Niger Delta Crisis Leads to Lower Oil Production
-------------- ---
2. (SBU) Nigeria's economy depends largely on oil exports,
accounting for about 80 percent of its revenues and about 90 percent
of its foreign exchange earnings. Militant activities in the Niger
Delta have resulted in the sabotage of oil pipelines and recurring
production shut-ins. The GON's budget for 2009 has a target of
2.209 mbpd, but oil production has been far short of this target
since the beginning of the year.
3. (SBU) When he signed the 2009 national budget in March, President
Yar'Adua noted that oil production had dropped to 1.6 mbpd and
acknowledged that this decline posed a challenge to budget
implementation. Local media reports that since then oil production
has dipped to about 1.3 mbpd, mostly as a result of an offensive by
the Joint Military Task Force in the heart of the Niger Delta that
triggered over 30 attacks on oil facilities by militants between May
15 and June 15. The fall in oil revenue has forced the GON to tap
its Excess Crude Account (ECA),which was intended to serve as a
sovereign wealth fund, to make allotted oil revenue disbursements to
the three tiers of government.
Naira Depreciates Due to Decline in External Reserves
-------------- --------------
4. (U) Lower revenues and foreign exchange reserves arising from
production shut-ins have undercut the value of the naira. According
to the Central Bank of Nigeria (CBN),foreign reserves dipped from
$53 billion at the end of December 2008 to $43.19 billion on July 3,
2009. The CBN's attempt to defend the naira by using foreign
reserves is unsustainable, which pushed down the naira from 146.72
naira/dollar on July 21 to naira 150.25/dollar on August 3.
Recently, dollar demand at the recently re-introduced Wholesale
Dutch Auction System (WDAS) has outstripped supply.
5. (U) This report was coordinated with Consulate Lagos.
SANDERS