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Japan quake worsens Nigeria’s lending access

By UDUMA KALU with agency reports
NIGERIA’s international negative investor grade ratings outlook was, Monday, worsened by the earthquake in Japan.

According to Roland Cooper, director of Fitch Ratings South Africa, the reconstruction that will need to be financed after the devastating tsunami and earthquake in Japan last week may impact Africa’s access to international debt markets.

Speaking at the Power Indaba, Cooper said that only two African countries had investor grade ratings, namely South Africa with BBB – and Namibia with BB, stressing that out of the 18 African countries currently rated by Fitch, only Nigeria had a negative outlook while the rest had outlooks of positive or stable.

He said: “Africa is getting ready to tap the international debt markets.”

Meanwhile, crude oil price dropped by more than $3, Friday, with US crude falling below $100 a barrel after the Japanese earthquake which knocked out oil refineries, temporarily curbing demand for crude in the world’s third-largest oil consumer.

It was reported that US crude fell to as low as $99.01 a barrel from a two-and-a-half-year high of $119.79 on February 24.

Crude was trading at $99.65 by 1400 GMT, before plunging to $99.1. ICE Brent crude fell $2.31 to $113.12 a barrel by the same time. Japan is the third-largest energy consumer after China and the US and imports almost all its energy needs.

Some refineries and nuclear power plants were shut after the disaster. It is hoped that the  shutdowns might increase import demand for refined oil products and fuels for electricity generators.

Natural gas rose around the world on speculation that Japan would buy more of the fuel, intensifying competition for liquefied natural gas.

Gas for next winter in the U.K., Europe’s biggest consumer, gained as much as 7.4 percent, to 74 pence a therm, the highest since November 2008, according to broker prices. The contract was at 73 pence as of 4:30 p.m. in London, equal to $11.80 per million British thermal units. U.S. gas for April delivery rallied 2.9 percent to $4.002 a million Btu in New York.

Barclays Plc analysts including London-based Kerri Maddock said in a note Monday: “The prolonged risk of nuclear outages could divert spot LNG cargoes to Japan and incrementally tighten LNG supply.”

The March 11 quake and tsunami, which left 1.3 million people without power, is expected to  prompt Asia’s second-largest economy to scramble for alternative fuel sources, driving up prices as it competes with other importer nations for spot supplies. Japan is the biggest user of LNG, accounting for about 35 percent of global trade in 2009, according to BP Plc statistics.

Britain is Europe’s fastest growing major gas importer as it turns to sea_ going gas tankers to make up for declining North Sea fields.

However, preliminary estimates for the cost of the 8.9 magnitude earthquake are as high as $35 billion, and the effects of the tsunami could cause that to grow.


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