with Agency reports
09 March 2018, Sweetcrude, Lagos —Nigeria might soon be faced with a crude oil market supply glut as fresh reports say 50 cargoes are yet to find buyers.
Quoting a trader, Reuters said the development comes as a large supply of light and medium grades from the North Sea and the Mediterranean have shifted buyers’ interest away from Nigerian crude.
Market reports said demand for Agbami and Qua Iboe has been higher than demand for other grades so far, while Qua Iboe was being offered at about dated Brent plus $2, steady from its Tuesday levels.
This is not the first time Nigerian crude grades would struggle to get buyers at the international market.
Nigeria’s March 2016 crude programme struggled to find outlets, with some 25 million barrels calculated to cost N159 billion at the time, were still unsold even as the April that year.
As a result of the low patronage, sometimes, the Nigerian National Petroleum Corporation, NNPC, had been severally forced to slash prices of Nigerian crude grade to attract buyers.
Despite the seeming gloom, some Nigerian grades could be facing at the market, in a statement on Thursday, the Nigerian National Petroleum Corporation, NNPC, said Indonesia wants to increase its purchase of crude oil from Nigeria.
According to a statement by the NNPC in Abuja, Head of Economic Affairs of the Indonesian Embassy, Mr. Dwiyatna Widinugraha, who disclosed this during a visit to the NNPC, stated that the country is seeking a Government-to-Government arrangement with Nigeria to facilitate the deal.
Before commencement of OPEC’s Declaration of Cooperation, Nigeria produced between 2.2 million barrels per day and 2.8 million barrels per day.
However, the country has enjoyed exemption from the Organisation of the Petroleum Exporting Countries, OPEC’s cut as a result of a drop in production caused by unrest in the Niger Delta and aging facilities which forced its production down to around 1. 500mbpd.
The country will join OPEC’s cut agreement once its production reaches 1.8mbp/d.
OPEC and its partners, especially Russia, agreed to cut production by 1.8mb/d in a pact which begun in January 2017.
The agreement has since achieved over 100 percent compliance, reducing oil glut and pushing oil prices to around $71 per barrel early in the year after an all-time low price of below $30pd in 2015.
However, the continuous surge in output from U.S shale producers has continued to undermine the group’s efforts at reducing glut and increasing prices.