Nigeria is in the worst position among major oil exporting countries in the Middle East, Africa and parts of Europe to have balanced budgets this year, with oil forecast to average $52.50 per barrel, according to Fitch Ratings Limited.
The country needs an oil price of $139 per barrel to balance its budget, the global rating agency said in a report on 14 major oil exporting nations in the Middle East, Africa and emerging Europe.
The forecast break-even oil prices of other African countries, Angola, Gabon and Republic of Congo were put at $82, $66 and $52 per barrel, respectively.
According to Fitch, Saudi Arabia needs an oil price of $74 per barrel; Bahrain, $84; Russia, $72; Kazakhstan, $71; Oman, $75; Azerbaijan, $66; Iraq, $61; United Arab Emirates, $60; Qatar, $51; and Kuwait at $45.
It said even after cuts in government subsidies and currency devaluations, 11 of them would not have balanced budgets this year, including Saudi Arabia, Bloomberg reported on Thursday.
“Fiscal reforms and exchange rate adjustments are generally supporting improved fiscal positions compared to 2015, but have not prevented erosion of sovereign creditworthiness,” Fitch said.
Only Kuwait, Qatar and the Republic of Congo have estimated break-evens that are below Fitch’s oil price forecast for this year.
Kuwait at $45 per barrel traditionally has a low break-even because of its high per-capita hydrocarbon production and more recently its “large estimated investment income” from its sovereign wealth fund, Fitch said.
Brent crude, a global benchmark, has averaged about $55 per barrel this year. It traded around $54.96 per barrel on Thursday.
The rating agency said it “substantially” raised the fiscal break-even prices for Nigeria, Angola and Gabon from 2015 levels because of rising government spending.
Meanwhile, the Nigeria LNG Limited has begun talks with potential buyers on new contracts for gas supplies from its first three production units at its Liquefied Natural Gas terminal, Reuters quoted a senior official of the company as saying.
Contracts for gas supplies from Trains 1, 2 and 3, which together produce nine million tonnes of LNG a year, are being discussed, said the official who requested anonymity. He was attending the Gastech trade conference in Chiba, outside Tokyo.
Source:© Copyright Punch Online