01 April 2015, Lagos – India, which recently replaced the United States as Nigeria’s biggest oil market, cut its import of the country’s crude by 38 per cent in December, while China did not import a barrel from the country in the period, data obtained from the Nigerian National Petroleum Corporation revealed.
India’s import of Nigerian crude tumbled to 5.2 million barrels in December, from 13.7 million in October and 12.4 million in November 2014.
China, which bought 1.9 million barrels of Nigerian crude in October, reduced its import from the country by 50.3 per cent to 946,913 barrels in November.
With the decline in imports from India and China, the share of the Asian region in Nigeria’s crude oil export dropped to 20 per cent in December from 30 per cent in October and 27 per cent in November.
The Asian region, which is the major target market for many oil exporters, is a key market for Nigeria.
Total export from Nigeria in the month of October stood at 65.9 million, down from 67.1 million barrels in September and 70 million barrels in August, according to the NNPC data.
“Four regions namely, Europe, Asia and Far East, South America and Africa remain the major destinations of Nigerian crude and condensate export,” the NNPC said.
Europe continued to be the largest regional importer of Nigerian oil as its imported 31.4 million barrels in December, up from 23.6 million barrels in October.
The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, told our correspondent that the decline in imports from the country’s top importers – India and China – was expected, adding that it became cheaper to buy oil from several other countries, especially from Central and South America.
“There was a lot of substitution between cargoes from West Africa and from these regions. Furthermore, Saudi Arabia raised oil output from 9.6 million barrels per day to 10 million bpd within the last quarter of 2014 to compensate for the fall in Libya’s oil output.
“The proximity to Asia means the extra barrels were pushed into Asia at lower prices. Saudi Arabia cut its official selling price to Asia in October and November but raised it slightly in December.”
Not only has the United States drastically reduced its import of Nigerian crude as a result of its increasing shale oil production, the country is gearing up to export its crude oil, with Asia being a key target destination.
After months of pressure over the ban on exports of most domestic crude in the US, the President Barack Obama administration in January took steps that were expected to unleash a wave of ultra-light shale oil known as condensate onto global markets.
The US imports of Nigerian crude oil tumbled by 75 per cent last year to 21.51 million barrels, the lowest since the country started importing from Nigeria, the US Energy Information Administration said.
The country, which traditionally had been the largest importer of Nigerian oil until the last few years, changed to the 10th largest in 2014.
In July last year, the US imports of Nigerian crude fell to zero for the first time on record, according to data from the EIA.
Analysts at Ecobank had recently raised concerns that the continued oversupply in the global oil market and the weak global economic picture could constrain oil demand.
“Thus, Nigeria could see a major reduction in oil revenues in 2015 compared to 2014 due to the much lower average oil price anticipated in the year. The country already faces considerable difficulties in selling its crude oil cargoes with a persistent overhang for its crude oil cargoes since December 2014,” they said.
The Ecobank analysts said the NNPC had offered further discounts to push sales but increasingly faced lower price differentials.
They noted, “This is expected to redirect government attention to other revenue sources as it seeks to fill the gap in its revenue profile. Receipts from crude oil sales have traditionally provided over 67 per cent of government revenue.
“The lower oil price environment could also sustain the downward trend in the country’s foreign reserves and exchange rate, which are dependent on the foreign currency earned by crude oil sales.”
Crude oil exports account for over 90 per cent of the country’s exports and remain the key source of foreign currency.