Nigeria’s crude oil receipts under threat as buyers favour Angola
The nation’s oil exports may be facing a significant hurdle as a decline in European demand creates a buyer’s market.
This is coming at a time the nation is grappling with oil theft and needs a strong export market to bolster its revenue.
Nigeria’s crude for May loading has been very slow to find buyers so far, with more than half of the scheduled cargoes yet clear.
More than 30 of the nation’s cargoes are still looking for buyers, according to traders specializing in West African crudes. A total of at least 53 are scheduled to load from Nigeria next month, according to data compiled by Bloomberg. Most of the consignments are one million barrels.
“Capacity is offline at some typical destinations for Nigerian crude such as Spain’s San Roque refinery and Italy’s Sarroch plant. Facilities that have halted capacity for work also include Shell Plc’s Pernis refinery near Rotterdam, Europe’s biggest plant,” Bloomberg said.
The country’s crude cargoes can be openly traded into either Asia, Europe or even the US, making the pace of sales a closely watched market detail.
Demand for Nigerian oil has been curbed by heavy refinery turnarounds in Europe that created an excess of April barrels going into the current May trading cycle, the people said.
Competitive rival producers in the Mediterranean have also cut into Nigeria’s sales, the people said.
The West African country’s sales also have to contend with higher freight costs and premium prices for more-immediate supplies.
By contrast, sales of Angola’s May-loading crude have been fairly steady, with only five or six out of the 34 planned shipments still available.
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The country’s crude benefited from good demand from buyers in Asia like China and India, the people said. The International Energy Agency also cited strong demand for Angolan barrels in India in its monthly report.
Also, the report said Mediterranean refiners can choose to skip Nigerian supply in favour of “cheap North African barrels that ship more quickly to the region, or they can process some of the large volumes of US West Texas Intermediate crude that have been arriving in Europe in recent months.”
The situation is further compounded by the specific challenge of finding buyers for Nigerian oil. Traditionally, France has been a major importer of Nigerian crude, averaging roughly 110,000 barrels a day over the past year. However, due to the nationwide French strikes and a decline in overall crude imports, this demand has plummeted.
This struggle to find buyers for its oil could have a negative impact on Nigeria’s economy. The nation relies heavily on oil exports as a major source of revenue for its national budget. A decline in sales volume or price could lead to a significant shortfall in government income.
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