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India Turned To US For Crude Oil…Abandons Nigeria

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crude oil

Nigeria generated N118.49 trillion from crude oil production between 1961 and 2014

India, Nigeria’s largest crude oil buyer has dumped Nigeria for US for the purchase of the product.  The Indian Oil Corporation (IOC) has issued a tender for one Suezmax or VLCC cargo of US crude loading in December, along with one Suezmax or VLCC of West African crude. This was barely a week after it was disclosed that the state-run company expected a second US crude cargo containing around 2.2 million barrels to arrive on the west coast by the end of October.

“International Oil Companies, IOCs, the country’s flagship refiner, has contracted 3.8 million barrels of US crude since July. Indian refiners have purchased heavier MARS crude from the US, as well as light sweet barrels. “Other state-run refiners like Bharat Petroleum Corp. Limited (BPCL) and Hindustan Petroleum Corp. Limited (HPCL), which are also key buyers of Nigerian crude, have also recently purchased US oil.’’

In an interview with S&P Global Platts, the General Manager of Nigerian National Petroleum Corporation, NNPC, Mele Kyari, had said: “In the short term we are not worried about rising US crude exports, because we actually sell into the US today so there is a reverse flow of trade, going from Nigeria to the US. “So far this year, 17 percent of Nigerian crude exports have been to the US, which was a sharp rise from few years ago. Indeed, since the US started exporting crude in 2015, Nigeria’s exports to the US have increased. By comparison in 2014, only 3.1 percent of Nigerian exports went to the US”.

According to trading sources, “The competition that Nigerian crude oil cargoes have faced from US crude oil grades in Northwest Europe over the past two years has begun to expand into other regions”.  “Crude oil sales accounted for the larger chunk of the oil revenue as N188.15bn was generated from crude oil sales while gas sales generated N29.69bn. The least oil revenue came from rent and gas flared penalty with N0.044bn and N0.184bn generated respectively.” Also, South Korea’s largest refiner, SK Innovation, had made its first purchase of U.S. crude, placed the order for over one million barrels. Nigeria produces light sweet crude, a similar grade with the U.S. WTI that refiners in Asia are now rushing because of favourable price and shorter shipping distance.

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