Data
released by the Nigerian National
Petroleum Corporation (NNPC) showed that the country’s oil exports in
February and March stood at 64.902 million barrels and 62.677 million barrels
respectively, down from 66.761 million barrels recorded in January. The price
of crude oil (Bonny Light) averaged $58.09 and $56.69 per barrel in February
and March respectively, while the naira averaged 194.47 and 197.07 to the
United States dollar at the interbank market, according to the Central Bank of
Nigeria. In March, the United States did not import a single barrel of Nigerian
crude, for the first time since July 2014.
Import from
India, which recently replaced the US as Nigeria’s biggest oil market, was
7.765 million barrels, which is 32 per cent lower than the 11.531 million
barrels it bought in January.
India’s
import of Nigerian crude had in December 2014 tumbled to 5.2 million barrels
from 13.7 million in October and 12.4 million in November. The share of the
Asian region in Nigeria’s crude oil export stood at 21 per cent in March, down
from 23 per cent in February and 24 per cent in January, according to the NNPC
data. The Asian region, which is now increasingly a major target market for
many oil exporters, is a key market for Nigeria.
NNPC said: “Four regions namely, Europe, Asia and Far East, South
America and Africa remain the major destinations of Nigerian crude and
condensate export.”
Import of
Nigerian crude from Europe, the country’s largest regional importer, fell to
27.002 million barrels in March, as against 29.093 million barrels in February
and 31.229 million barrels in January. In an attempt to win European market
share, Saudi Arabia’s state-oil company, Saudi Aramco, cut the official selling
price for its Arab Light crude to Northwest Europe by $1.50 per barrel for
February 2015, putting it at a discount of $4.65 per barrel to the Brent
Weighted Average – the lowest price since 2009. Nigeria, Africa’s top oil
exporter, is grappling to retain its market share, especially in Asia, where it
saw an increase in the import of its crude oil last year, after it lost
business in its main market, the US.
The
country’s crude oil cargo has been selling at a discount in the past few months
amid growing competition from other sellers, including Saudi Arabia. In a bid
to attract buyers, the NNPC last month lowered the official selling price for
its largest crude oil stream, Qua Iboe, to dated Brent plus 35 cents per
barrel, the lowest differential since May 2005, according to Reuters. Bonny Light
fell to dated Brent plus 23 cents. That the smallest differential since 2005
and compares with a 50 cent premium in June and $2.55 a year earlier.
The Head of
Energy Research, Ecobank Capital, Mr.
Dolapo Oni, said: “Our biggest buyer since 2013 has
been India and we are yet to firm up that relationship with long-term contracts
and other concessions. So, we are quite vulnerable in the fast-evolving global
oil market. I think the key move that can give us a competitive edge would be
to firm up our relationship with our key buyers in India, Netherlands, Spain,
France and Indonesia.”
A policy
analyst, Mr. Ademola Oshodi, said: “With oil prices still unstable, Nigeria is left in a
predicament. The government will have no other option but to increase tax
revenue, impose price controls and potentially eliminate the oil and kerosene
subsidies, something that may create unrest in the country. Fighting corruption
and blocking leakages, the new President’s pet policy, will have to take a
raging and savage turn to ensure that monies are returned, people prosecuted to
discourage theft, and savings made. The Oransaye report on merger of federal
agencies and likely layoffs will have to be acted on.”
In a new
report released last week, Deloitte
Global said that most members of the Organisation
of Petroleum Exporting Countries (OPEC) required oil prices of about $100
per barrel to balance their domestic budgets, putting the breakeven oil price
for Nigeria at $122.
Brent crude
oil, the global benchmark, dropped below the $60 per barrel threshold last
Monday to around $57 per barrel for the first time in three months, undermining
optimism that oil prices might be recovering as increasing demand eats into
stockpiles. It traded around $57 on Wednesday.
The Deloitte
experts, including the Global Oil and Gas Leader, Anton Botes, said in the report that if prices remain low for an
extended period of time, some OPEC nations risk traveling a slippery slope
towards greater social unrest,
The report
also noted that the world’s major oil suppliers were casting about for new
buyers, with the loss of the US as an anchor market, adding that the Middle
East, for instance, had seen its US market share fall, for both crude and
refined products, and was now struggling to work out the fundamentals of how to
operate in a market awash with oil.
The Deloitte
report added: “To this end, Middle Eastern producers
are aiming to redirect their flow of oil east to Asia, rather than west to the
Americas, while simultaneously increasing their share of European consumption. Russia,
too, has seen a change in its traditional consumer market as Europe seeks to
diversify supply and has also begun to turn to Asia for new buyers, as have
smaller suppliers in Africa like Angola and Nigeria.”
(Source: Punch)
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