Nigeria’s crude oil export to Europe and Asia, two of the country’s key markets, declined by 6.6 million barrels in September, further reducing the country’s oil revenue at a time the plunge in global oil prices entered its third month.
The fall in oil prices, which began in June 2014 when prices peaked at $115 per barrel, had led to a decline in the country’s oil earnings, the major part of government revenue.
According to the latest monthly report from the Nigerian National Petroleum Corporation, export to Europe, which is Nigeria’s biggest regional market, tumbled to 29.2 million barrels in September from 33.6 million in August.
The Asian region, which is the major target market for many oil exporters, reduced its import of Nigeria’s crude oil by 4.4 million barrels in the month to 18.9 million barrels.
India, which has replaced the United States as Nigeria’s biggest market, reduced its import of Nigerian crude in September by 3.1 million barrels, among others.
Total export from the country in the month declined to 67.1 million barrels from 70 million barrels in August, according to the NNPC data.
“Four regions namely, Europe, Asia and Far East, South America and Africa are the major destinations of Nigerian crude and condensate export,” the NNPC said.
Not only has the US drastically reduced its import of Nigerian crude oil 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 Obama administration on Tuesday took steps that were expected to unleash a wave of ultra-light shale oil known as condensate onto global markets.
Estimates show that the entry of the US oil producers in the global markets will further increase global supplies by as much as one million barrels per day by the end of 2015.
An energy specialist at Ecobank, Mr. Dolapo Oni, said, “The key market everyone is targeting now is Asia. If the US starts to export to Asia, competition will intensify and prices could drop to $40 per barrels. The Nigerian government would experience serious revenue shortfall.
“There is little Nigeria can do to compete with countries like Saudi Arabia and US because they have refineries in Asia and can sell to them. We can only continue to offer the discounts we are offering to the Asian buyers,” he said.
Nigerian crude cargoes for January and February programmes loading were reported this week to have continued to fall at a steady pace due to weak demand.
Asian and European demand for Nigeria and other West African cargoes has been slow so far, exacerbated by high freight rates and the availability of cheaper sweet crudes in both regions, according to Platts.
Nigeria’s flagship grade, Qua Iboe, was pegged close to Dated Brent plus $0.50 per barrel on Monday afternoon. It was assessed at Dated Brent plus $0.51 per barrel on Wednesday, the lowest since April 22, 2009, Platts data showed.
The Nigerian market was said to have remained oversupplied with approximately 20 million barrels for January still available along with almost the entire February programme.
Traders said that as a result, crude values were expected to fall, especially with such weak buying interest from Asian and European refiners. Click to signup for FREE news updates, latest information and hottest gists everyday
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