Moody’s warns of drop in Nigeria output

A senior Moody’s analyst told Reuters that Nigeria could lose around 15 percent of its oil output by 2017. The country currently produces 2.1 million barrels of oil per day, which accounts for nearly 70 percent of government revenues.

Reduced output could worsen the country’s cash shortage and stymied growth, especially because oil prices will not rise significantly through the end of 2016, according to Aurelien Mali at the ratings agency. The halving of oil prices hit the country’s economy hard in 2014, with the naira falling to a record low of 241 to the dollar in June 2015 compared to 162 in the same month of 2014.

President Muhammadu Buharu, who took office in May and recently named his cabinet of ministers, promised to reform the country’s ailing oil industry, which has the largest output Africa but is plagued by corruption and mismanagement.

Exploration companies gained permission to control their own budgets earlier this year to prevent operational limitations posed by the country’s cash shortage. Inefficient operations and bureaucracy may still need overhauling to ensure the country’s industry gets the investment it needs to maintain production, Mali says.

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