with agency reports
26 January 2016, Sweetcrude, Abuja — India is set to import more crude oil from Nigeria according to the Indian Oil Minister, Dharmendra Pradhan.
Mr. Pradhan stated this at the sidelines of the fourth India-Africa Hydrocarbon Summit in New Delhi.
According to him, “Nigeria has now agreed to increase the term contract from 1.7 million tonnes per annum to three million tonnes in 2016.”
Nigeria is the third-largest contributor to India’s oil imports, accounting for 11.59 million tonnes (MT) in the first half of this financial year, behind Saudi Arabia (19.56 MT) and Iraq (17.01 MT).
The benefit of a term contract is that not only does it assure a certain quantity to be supplied but also ensures a stable price unlike oil bought from spot markets whose price can fluctuate drastically. Apart from Nigeria, Sudan also wants to increase its engagement with India.
Nigeria replaced Saudi Arabia as the largest crude oil supplier to India after its oil exports to India last year surged by nearly 200 percent, supplying some 745,000 barrels per day. It’s the first time in at least four years that Saudi Arabia, the world’s top crude exporter, has lost the top spot, according to reports.
The shift comes as more Indian refiners switch out their long-term contracts with Middle East suppliers in favor of African oil spot purchases. Saudi Arabia also fell behind Russia and Angola last month as the largest crude supplier to China.
The petroleum kingpin struggles to maintain market share in Asia as the gap narrows between the Middle East price marker and the international crude oil benchmark Brent, Reuters reported.
India’s African oil imports rose to the highest in more than four years, from 15.5 percent in April to 26 percent in May with tankers mainly from Nigeria and Angola.
Meanwhile, the share of Middle Eastern oil to India fell to 54 percent in May from 61 percent in April, with Saudi Arabia supplying some 732,400 barrels per day.
Oil prices have dropped for Nigeria’s premium over Brent in recent months, which have made the former more attractive to importers.
The Nigerian National Petroleum Corporation (NNPC) reduced the prices of Nigeria’s crude oil grades to their lowest in over a decade as the nation fights for international market share. Nigeria’s exports to the United States have also shrunk from almost one million barrels per day in 2010 to just 30,000 this year.
The falling global oil prices have posed tough challenges for oil-dependent Nigeria. Nigeria is Africa’s largest economy and lead oil producer, generating about $70 billion in state revenue each year – more than two-thirds of which comes from exports in gas and oil.