The Federal Government is poised to secure $4 billion in annual revenue by trading approximately 50 million barrels of crude oil on Nigeria’s commodities exchange.
The initiative aims to introduce crude oil and gas trading to enhance access to financing for the industry, which serves as the nation’s primary foreign-exchange earner.
The Lagos Commodities and Futures Exchange, in collaboration with the Securities and Exchange Commission (SEC), is finalizing trading arrangements after seeking guidance from the regulatory body in Abuja, stated Akinsola Akeredolu-Ale, the CEO.
“We are considering allocating 10 to 20 per cent of Nigeria’s crude oil production for trading on the Lagos Commodities and Futures Exchange,” Akeredolu-Ale revealed in an interview, refraining from specifying a commencement date.
This endeavor marks the first instance of trading fossil fuel on an exchange within Africa’s largest oil-producing nation.
Nigeria’s oil production averaged over 1.4 million barrels per day last month, primarily exported to international buyers, with a portion sold to local refiners.
Persistent challenges, including underinvestment, crude oil theft, and infrastructure vandalism, have hindered Nigeria’s compliance with its OPEC+ quotas.
Revitalizing the industry is imperative for President Bola Tinubu’s economic growth agenda, targeting sustained growth rates of 6 per cent or higher in the foreseeable future. Economic growth decelerated to 2.7 per cent in 2023 from 3.1 per cent the previous year.
Tinubu advocates for increased public and private-sector investments across the extractive industry to bolster revenues and reduce imports. Recently, his administration introduced regulations compelling oil producers to prioritize sales to domestic refineries before exporting.
According to Akeredolu-Ale, the Lagos Commodities and Futures Exchange will facilitate connectivity between oil producers and local and international markets, mitigate default risks, enhance product availability, and stimulate additional investments.
The exchange anticipates trading approximately 50 million barrels annually, translating to $4 billion at current market prices. Akeredolu-Ale highlighted the significance of this initiative in enabling Nigerians to directly benefit and fostering the growth of the capital market through trading in both crude and refined product contracts.
Having commenced operations in 2022 with gold trading, the Lagos Commodities and Futures Exchange has facilitated transactions exceeding 66 million naira ($58,000) in the precious metal through registered commodity brokers. Additionally, the exchange trades various agricultural products, including soybeans, paddy rice, maize, sorghum, sesame seeds, palm oil, and cassava.
