Lagos — Nigeria’s revenue is currently being threatened as the country’s highest crude oil importer; India has slashed crude importation by approximately $395 billion in April.
This development comes following reports of dwindling earnings by the Nigerian National Petroleum Corporation, NNPC as well as its inability to meet up with contribution to the Federation Account Allocation Committee, FAAC account since this year.
India is said to have reduced oil imports by $39.5bn in April, according to data from the country’s Petroleum Planning & Analysis Cell.
India’s crude oil imports from Nigeria in 2020 amounted to $10.03bn, representing 17 percent of Nigeria’s total crude exports for the year according to the NNPC as quoted by OilPrice.com.
India is currently battling the third wave of the COVID-19 virus, and as such, its major cities are currently on lockdown over the surge in the virus in April. This means oil cargoes from Nigeria were unable to gain access into the Asian country.
The NNPC was prompted to drop the official standard price of its main export streams, Bonny Light, Brass River, Erha, and Qua Iboe, by 61-62 cents per barrel below its April 2021 prices. They traded at $0.9, $0.8, $0.65, $0.97 per barrel respectively, below dated Brent, the international benchmark, as Oilprice.com showed.
India had been buying the not-too-light and not-too-heavy Nigerian crudes that suited its refiners.
Reuters reported that the Indian Oil Corporation’s owned refineries were operating at 95 percent capacity in April, down from 100 percent at the same time the previous month.
An official at the IOC was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.” Hundreds of seafarers risked being stuck at sea beyond the expiry of their contracts, a large independent crude ship owner reportedly told Bloomberg.
India reportedly bought more American and Canadian oil at the expense of Africa and the Middle East, reducing purchases from members of the Organisation of the Petroleum Exporting Countries, OPEC to around 2.86 million barrels per day.
This reduced the group’s share of imports to 72 percent from around 80 percent previously, as India’s refiners were diversifying purchases to boost margins, according to Reuters.
India also plans to increase local crude oil production and reduce import expenses as its population swells, according to Bloomberg.
A deregulation plan by the Narendra Modi-led government to boost national production to 40 million tonnes of crude oil by 2023/2024, an increase of almost eight million tonnes, had already been initiated.
According to Business Today, an Indian paper, the country currently imports 82 percent of its oil needs, which amounted to $87bn in 2019.
The state owned Oil and Natural Gas Corporation produces about 20.3 million tonnes of crude oil annually. Increasing total production to 40 million tonnes will reduce total imports to 67 per cent.