Nigeria's Oil Crisis - $800 Million Debt

Discussion in 'General Trading Discussion' started by gracer, May 27, 2015.

  1. gracer

    gracer Senior Investor

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    Nigeria which is Africa's biggest oil producer is ironically sufferring from oil crisis because of debt. Although the outgoing government has promised to pay its $800 Million debt to its oil suppliers so the country is expecting an end to the month-long oil crisis. The Nigerian economy has been crippled over the said crisis and its residents have been having a hard time living with limited source of petrol. Below is a link to a related article:

    http://www.usnews.com/news/business...ng-800-million-to-oil-suppliers-to-end-crisis
     
  2. CarpeNemo

    CarpeNemo Well-Known Member

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    This is going to get tricky. Nigeria is already so far behind with these payments but the country has practically come to a stand-still, and it's affecting things on an international scale by forcing airliners to refuel in other countries. It's probably not going to help politics either, since a new president is about to come into office. It could get pretty nasty for a bit, but with oil prices falling it could be good timing for getting some stability back in the Nigerian economy.
     
  3. Fredrick Jones

    Fredrick Jones Well-Known Member

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    No matter how large you income, if you have bad spending habits you will end up in trouble. California had the same problem a few years ago, except on a smaller scale with electricity. The electric distribution company did not pay the companies supplying the electricity, so these companies started to cut down on the amount of electricity they would give california. This ofcourse played havoc.

    Nigeria is far more serious, it could cause even more social unrest and probably will result in the government being overthrown.
     
  4. gracer

    gracer Senior Investor

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    I really can't imagine living with a lack or absence of oil for the worst. Almost all trades and daily regular activities depend on oil and if there's an oil problem, expect to have major impacts in other industries as well. What's happening in Nigeria right now is such an awful situation to be in as a regular citizen, more so for businesses. Could it really be a form of sabotage from the outgoing government?
     
  5. Sunflogun

    Sunflogun Well-Known Member

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    Oil is pretty much at the center of the economy that is a fact and the fluctuation of the price and production can make the success of failure of the economy at a certain time like is happening in Nigeria now.
     
  6. galefussy

    galefussy Member

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    It looks like another consequence of a corrupt government. It's producing, and I assume exporting 2 million barrels a day and the government won't direct some of that money towards refineries or infrastructure.
     
  7. CarpeNemo

    CarpeNemo Well-Known Member

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    I think it's a mixture of all of the above. At least with the California scenario, there was an entire country there that would have bailed CA out if it had gotten worse than it was.

    Government corruption is a big issue, and I wouldn't say it's necessarily an attempt to sabotage the country, but it's more likely that the corruption was sustainable and things moved smoothly so long as those corrupt officials were in office. Now that things are shifting, kickbacks aren't flowing and the gears are getting rusty, and the collapse is coming. It's a terrible thing when you have to consider that corruption was the lesser of the evils, here.
     
  8. Corzhens

    Corzhens Senior Investor

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    Yesterday I read the item about Venezuela going bankrupt with their weak economy. According to the writer, it may be mainly caused by the consistent low price of oil in the world market. Maybe Nigeria is also expecting a continuous rise of oil prices in the world market and the disappointment is now causing a shortage of oil. With that huge debt, Nigeria will have a hard time rebounding considering the culture of their people.
     
  9. Trendtrader

    Trendtrader Member

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    Great, I suppose this means an increase in Nigerian 419/advance payment scam emails.
     
  10. petesede

    petesede Guest

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    Venezuela and Nigeria both have the same problem. They contract out oil production to US and Brittish companies, and those companies bribe politicians to get amazing deals. The President of Nigeria gets a couple million dollars, and BP gets oil rights for billions of dollars worth of production at great terms.. the actual governments of both countries get pennies on the dollar for ´their´ oil. The amount of revenue that goes to Venezuela and Nigeria for the oil the produce is laughable.

    The problem isn´t so much government spending or corruption within the main part of their economy, it is the corruption that takes place when the oil contracts are made. The reason companies like Exxon and BP have such crazy profits is because they are able to bribe local politicians so easily.
     

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