Nigeria turns to Europe for unsold crude

After suffering downturn from the Asian and American markets, Nigeria has turned to Europe for its over 14 million barrels of June-loading crude still seeking an outlet for sale.

Already, European buyers have begun showing interest in Nigeria’s June programme, but new sales are slow to filter into the market due to a persistent overhang of Atlantic Basin cargoes. A report yesterday by Reuters said traders perceived this new development as emerging

positive signs for Nigeria, which has suffered immense downtime from its major crude markets. The United States, which was hitherto the biggest consumer of Nigeria’s crude, squeezed the country’s crude grade from its market in the second quarter of 2014. The Asia market, which later served as a respite, has also turned down a larger chunk of Nigeria’s crude.

But with at least 14 million barrels of June-loading Nigerian crude still seeking an outlet, traders said the focus would likely be Europe, where strong refinery margins are expected to spur strong run rates through the summer. It was learnt that between 15 and 20 June-loading Nigerian cargoes are still available, along with more than half of July’s 54 cargoes.

“Europe is the place for the WAF programme,” one trader said. “I expect it’s probably going to be the biggest month there.” Elsewhere in the market, Indian refineries were in talks with Iraq to buy crude for strategic storage, and the Orgnaisation of Petroleum Exporting Countries (OPEC) was not expected to cut its output target during its meeting this week.

Traders said there were some positive signs emerging, including a narrowing in the spread between Brent and US WTI crude, which could enable arbitrage to the West. Brent’s premium to Dubai was also narrowing, which could make Atlantic Basin exports to Asia more viable. Other unusual buyers were also coming out to take advantage of the drop in premiums, including Canada’s Come-by-Chance refinery.

However, Indonesia’s Pertamina has issued a tender to buy crude oil for August delivery. In its tender for July crude, it took two cargoes of Qua Iboe from Shell, as well as a cargo of Escravos from Chevron.

Meanwhile, Nigeria and other oil producing nations have mooted $80 per barrel as new ‘fair’ oil price. The countries said this at a seminar, which heralded the 167th meeting of the OPEC, beginning today.

Speaking in Vienna, Austria at the ongoing OPEC International Seminar, Head of Nigeria’s delegation to the 167th OPEC Meeting, Dr. Jamila Shu’ara, stated that Nigeria under the leadership of President Muhammadu Buhari, a one-time Minister of Petroleum Resources and Head of Nigeria’s Delegation to the OPEC Conference, would continue to work for the realisation of the aims and objectives of the organisation.

The Federal Government, under the administration of Buhari, she said, pledged its commitment to playing more proactive and effective roles in the affairs of the oil cartel. A statement by Group General Manager, Group Public Affairs of Nigerian National Petroleum Corporation (NNPC), Ohi Alegbe, said Shu’ara’s remark was followed by an incisive presentation to the seminar by the Group Managing Director of the NNPC, Dr. Joseph T. Dawha, under the theme: Technology and the Environment.

“I am here to covey to all Heads of Delegation of OPEC member countries, and indeed representatives of other countries, President Muhammadu Buhari’s gratitude, that of the government and the people of the Federal Republic of Nigeria to member countries of our organisation, and indeed the international community, for the keen interest shown and, in some cases, the support given to Nigeria towards the implementation of what has become a very successful political transition programme,” Shu’ara said.

She also said the Buhari administration was committed to prosecuting the amnesty programme in the Niger Delta with vigour with a view to bringing about lasting peace and stability in the area, as well as in other parts of Nigeria; thus making the operational environment safe and attractive once again.

In his presentation, Dawha said despite the odds, crude oil would continue to play an important role in the future world energy balance for decades to come. He called on the global oil industry to always seek to strike that delicate balance between adaptation of technology to increase production and the need to protect the environment.