The Nigerian National Petroleum Company Limited (NNPCL) has explained how the Russian-Ukraine crisis dipped demand for the country’s grades from the once-dependable Asian market.
It said the situation made India, a primary destination for Nigerian offerings, to opt for discounted Russian barrels to the detriment of some Nigerian volumes.
Executive Director, Crude & Condensate, NNPC Trading Limited, Maryamu Idris, made the disclosure during a panel presentation at the Argus European Crude Conference in London.
A statement yesterday quoted her as saying: “To illustrate the extent of this shift, Nigeria’s crude exports to India dwindled from approximately 250,000 barrels per day (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194, 000 in the subsequent six months afterwards. And so far this year, only around 120, 000 bpd of Nigerian crude volumes have made their way to India.”
She noted that the Nigerian crude flow to Europe has increased in a bid to fill the supply gaps, adding that six months prior to the war, 678, 000bpd of Nigerian crude grades went to Europe, compared to the 710, 000bpd six months later, and 730, 000bpd so far this year.
Idris continued: “This trend makes it evident that Nigerian grades are increasingly becoming a significant component in the post-war palette of European refiners.
“Several Nigerian distillate-rich grades have become a steady preference for many European refiners, given the absence of Russian Urals and diesel.
“Forcados Blend, Escravos Light, Bonga and Egina appear to be the most popular, and our latest addition, Nembe Crude, fits well into this basket. This was a strong factor behind our choice of London and the Argus European Crude Conference as the most ideal launch hub for the grade.”
On production challenges, she said, like many other oil-producing countries, Nigeria had faced a fair share of problems, aggravated by the COVID-19 pandemic.
According to her, they include reduced investment in the upstream sector, supply chain disruptions, ageing oil fields and theft by economic saboteurs.
These factors, she observed, contributed to production declines in the second half of 2022 and early 2023.
Idris, however, noted that the challenges are fast becoming a thing of the past with the introduction and implementation of the Petroleum Industry Act (PIA) of 2021 to rejuvenate the business landscape and re-position NNPCL to adopt a more commercial approach to the management of the nation’s hydrocarbon resources.
She hinted that the national oil company had struck partnerships with notable financial institutions to promote upstream investments and sustainably grow production capacity in the coming years.
The event, themed, “The Invisible Hand: How Are Shareholders and Asset Managers Meeting the Crude Industry? What Does This Mean for the Future of Crude in Europe?” was moderated by Vice President Crude of Argus, James Gooder.