The Lagos Commodities and Futures Exchange (LCFE) in Nigeria is poised to introduce crude oil and gas trading, aiming to bolster funding opportunities for the nation’s primary foreign-exchange generator, the oil industry. Collaborating closely with the Securities and Exchange Commission, the LCFE is diligently meeting trading requisites, with a target of allocating 10 to 20% of Nigeria’s crude oil production for trading on its platform.
This landmark initiative marks the inaugural inclusion of fossil fuels on an exchange in Africa’s leading oil-producing nation. By facilitating connections between oil producers and both local and offshore markets, the LCFE aims to mitigate default risks, enhance product accessibility, and catalyze increased investment in the sector.
According to the director of the LCFE, the exchange anticipates trading approximately 50 million barrels, equivalent to $4 billion annually at current prices. He emphasized that this initiative will directly benefit Nigerians and further bolster the capital market by facilitating trading contracts for both crude oil and petroleum products.
The agency underscores the importance of revitalizing the energy sector, stating that it is “crucial” for Nigerian President Bola Tinubu to achieve his long-term economic growth target of 6 percent or higher in the coming years. Nigeria’s economic growth rate has decelerated to 2.7 percent in 2023 from 3.1 percent the previous year.
Tinubu is actively encouraging investment from both the public and private sectors in the extractive industries to enhance revenues and diminish imports. His administration recently introduced a set of regulations requiring oil producers to prioritize selling crude to domestic refineries before exporting it.
Source: Energy Ghana