Brent crude has gained roughly 57% since the start of 2022.

The global commodity remains supported by ongoing geopolitical risks and rising demand. As oil producers enjoy the rich bounties from surging commodity prices, some countries have failed to make the most of such an opportunity.

Nigeria’s sub-optimal oil production, poor infrastructure, and fuel subsidies have sapped the benefits from surging oil prices.

For other countries, the rally in oil prices means more foreign exchange reserves, higher revenues, and potential economic growth. In Nigeria’s case, this blessing could turn into a curse.

It is widely known that oil sales make a massive chunk of Nigeria’s export earnings and government revenues. Despite being Africa’s largest crude producer, the country exports the global commodity but imports all by-products amid the weak infrastructure.

So as oil prices rally, this could support earnings but also take a chunk out of foreign exchange earnings. It does not end here.

Anything that is left is devoured by petrol subsidies which are expected to cost the government almost $10 billion this year.

As FX reserves are drained this continues to worsen Nigeria’s problem of dollar shortages which has dragged the Naira lower. In January of 2022, the government postponed the planned petrol subsidy removal till further notice, citing “high inflation and economic hardship”.

Even if the government was to remove the subsidies in the future, the burning question is whether Nigeria has the ability to weather the storm such a move could create.

Focusing back on oil, the global commodity remains supported by supply concerns and prospects of higher demand after China relaxed lockdowns. Although various fundamental forces are pulling and tugging at oil, the path of least resistance remains north.

Oil benchmarks are trading near multi-year highs and have the potential to push higher in the near term. This could mean more for pain for Nigeria despite other oil producers cashing in and enjoying the commodities boom.

For more information, please visit: FXTM

Lekoil Nigeria Limited has asked the court to punish Savannah Energy for contempt of court for proceeding with the Extraordinary General Meeting held on Thursday, April 7, 2022 despite an injunction issued by the court, and for encouraging the general public to discountenance the ‘BOUGHT’ court injunction.

Wole Olanipekun (SAN), appeared for Lekoil Nigeria Limited in the application filed by the company against Savannah Energy Plc, a subsidiary of Savannah Energy Plc at the Federal High Court of Nigeria in Lagos, on June 1, 2022.

Lekoil Cayman Limited, the second defendant in the suit that was filed to halt the EGM challenged the jurisdiction of the court to issue an order on a company without a physical presence or business in Nigeria.

The presiding judge, Justice Y. Bogoro, adjourned the hearing of the application by the plaintiff, Lekoil Nigeria, to June 20, 2022 and upon closure of the suit, the application challenging the court’s jurisdiction by Lekoil Cayman Limited will be entertained.

You may recall that, Lekoil Nigeria Limited, joined by a number of third parties including Lekoil Oil & Gas Investments Limited, Mayfair Assets & Trust Limited, Lekoil 276 Limited, and Lekoil Exploration & Production Nigeria Limited, was granted an injunction by the Federal High Court of Nigeria against Lekoil Limited and Savannah Energy Investments Limited restraining them from taking any steps in furtherance of the transfer of any interests in oil and gas assets of Lekoil Nigeria Limited and the transfer or creation of any interest in Lekoil Nigeria Limited, that will alter the ownership, equity or share capital structure of Lekoil Nigeria Limited.

Lekoil Nigeria had sought the injunction further to the announcement of February 28, 2022 by Lekoil Cayman Limited that it had entered into an agreement with Savannah Energy Investments Limited, a subsidiary of Savannah Energy PLC.

Prior to the injunction, Lekoil Cayman and Savannah Energy had scheduled an Extraordinary General Meeting (EGM) to hold on Thursday, April 7, 2022. Both companies proceeded with the EGM as scheduled,  acting in defiance of the court injunction.

A statement released by the Special Adviser on Media and Publicity to President Buhari, Femi Adesina, said the president said this during Iftar with members of the business community and the leadership of political parties in Abuja on Tuesday night, April 26.

The president said his administration had done “exceedingly well” in improving the business climate of Nigeria. The president asked the private sector to complement government’s effort in poverty reduction and job creation for young people. In 2020, Nigeria ranked 131 globally on the World Bank’s ease of doing business index. The country moved up by 15 places from its previous position — 146.

‘‘No administration has done as much as we have done in the creation of a climate best suited for business, big and small, to thrive. The business index that is globally recognized has acknowledged that the ease with which business is carried out in the country has never been better than it is today. We will continue to make it better.

We will equally continue to count on the support of the private sector to improve economic growth and create new job opportunities for our teeming population.

Employment is critical to stability and prosperity of our country. Government and the private sector, working together, have an opportunity to transform the lives of people in ways that was hard to imagine in the past.”the President said