Nigeria’s Crude Inflow into Global Markets Affected by Russia-Ukraine Crisis, Reveals NNPC Ltd.
Nigerian National Petroleum Corporation, (NNPC) Ltd. has shed light on the repercussions of the ongoing conflict between Russia and Ukraine, revealing how it has affected the inflow of Nigerian crude oil in the global oil market. This has resulted in a decline in demand from the traditionally reliable Asian market since the commencement of hostilities in the Eastern bloc.
During a panel presentation at the Argus European Crude Conference in London, Maryamu Idris, the Executive Director of Crude & Condensate at NNPC Trading Limited, highlighted that besides the considerable price shocks affecting global commodity and energy prices, the conflict between Russia and Ukraine has created a scenario where India, a key destination for Nigerian crude grades, has shown a heightened preference for discounted Russian barrels.
This shift in preference has negatively impacted certain Nigerian volumes.
“To illustrate the extent of this shift, Nigeria’s crude exports to India dwindled from approximately 250,000 barrels per day (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194,000 in the subsequent six months afterwards. And so far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India,” she said.
However, she also observed that Nigerian crude exports to Europe have risen as an effort to fill the supply gaps created by the ban on Russian crude. She noted that six months before the conflict, 678,000 barrels per day (bpd) of Nigerian crude grades were destined for Europe. In the subsequent six months, this figure increased to 710,000 bpd, and in the current year, it has further risen to 730,000 bpd.
“This trend makes it evident that Nigerian grades are increasingly becoming a significant component in the post-war palette of European refiners. Several Nigerian distillate-rich grades have become a steady preference for many European refiners, given the absence of Russian Urals and diesel.
Forcados Blend, Escravos Light, Bonga, and Egina appear to be the most popular, and our latest addition — Nembe Crude – fits well into this basket.
This was a strong factor behind our choice of London and the Argus European Crude Conference as the most ideal launch hub for the grade,” Idris also said.
On production challenges, Idris remarked that, like many other oil-producing countries, Nigeria had faced production challenges aggravated by the COVID-19 pandemic, including reduced investment in the upstream sector, supply chain disruptions impacting upstream operations, ageing oil fields, and oil theft by unscrupulous elements. These factors, she said, contributed to production declines in the second half of 2022 and early 2023.
Idris, however, noted that the challenges are fast becoming a thing of the past with the introduction and implementation of a new framework for the domestic petroleum industry (the PIA of 2021), rejuvenating the business landscape, and re-positioning NNPC Limited to adopt a more commercial approach to the management of the nation’s hydrocarbon resources.
According to her, NNPC Limited has secured vital partnerships with notable financial institutions to promote upstream investments to restore and sustainably grow production capacity in the coming years.
“NNPC Limited is championing concerted efforts in partnership with host communities and private stakeholders to address the security and environmental challenges in the Niger Delta to further fortify production growth. Suffice to say we have already begun seeing significant progress on the rebound.
In September 2023, Nigeria recorded its highest crude oil and condensate output in nearly two years, reaching 1.72 million barrels per day. This, we believe, is just the beginning of our production rebound.”
She affirmed that in addition to sustainably growing upstream production volumes, NNPC Limited is also increasing its participation in the downstream sector in line with a ‘wells-to-wheels’ approach, taking the country’s unique hydrocarbon molecules as close as possible to end-users.
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The vehicle for this, she said, is the restructured NNPC Trading Company, focused on growing NNPC’s presence in the global market for crude, condensate, gas, and petroleum products.
The Argus Crude European Crude Conference Panel Session was held with the theme, ‘The Invisible Hand: How Are Shareholders and Asset Managers Meeting the Crude Industry? What Does This Mean for the Future of Crude in Europe?’
Vice President Crude of Argus, James Gooder, moderated the event.
