Against the backdrop of supply disruptions in the Niger Delta region, refineries from India and the United States are backing away from buying Nigerian oil amid heightened uncertainty about deliveries.
Their reluctance to buy is limiting the prices Nigeria can get for its oil even as there is less of it, another hit to the finances of a country battling its worst economic crisis in decades, Reuters reported on Wednesday.
The PUNCH had exclusively reported last week that the country risked losing some of its traditional buyers to rival producers such as Iran and Saudi Arabia following the spate of production disruptions largely caused by the recent upsurge in militant attacks on oil infrastructure in the Niger Delta.
A group calling itself the Niger Delta Avengers has staged a number of attacks on installations belonging to Shell, Eni and Chevron, pushing output in what is usually Africa’s largest crude exporter down past 20-year lows last month.
Some oil facilities have clawed back output, but the militant attacks have continued and the group has vowed to bring Nigerian production to zero.
“Not everybody wants to be caught up in that, so they will avoid it,” the Managing Director of PetroMatrix in Switzerland, Olivier Jakob, said, adding, “The refineries will walk away from it.”
India’s Hindustan Petroleum Corporation Limited was forced last month to cancel a vessel it chartered to carry two million barrels of West African crude due to the Qua Iboe force majeure.
The state-run Indian Oil Corporation Limited, a major buyer of Nigerian grades over the past year, has stated in its recent tenders that it would not take grades under force majeure.
Qua Iboe, Nigeria’s largest crude oil stream, remained off the list in its latest tender, according to a document seen by Reuters, an extremely unusual development in its requests for sweet crude.
Indonesia’s Pertamina, another frequent buyer, also chose not to buy Nigerian grades in its recent tenders, favouring Congolese Coco, Angolan Girassol and Saharan Blend from Algeria instead.
Traders said Pertamina had shifted its preferences since the violence and uncertainty in Nigeria escalated, although the Senior Vice-President, ISC Pertamina, Daniel Purba, told Reuters that the firm was “monitoring” Nigeria, but “currently it’s still not affecting crude purchasing.”
Four of Nigeria’s oil grades, including the largest stream, Qua Iboe, have in the past month been under force majeure, a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
ExxonMobil, which declared force majeure on Qua Iboe in May due to an accident, lifted the declaration last week, but the unpredictability is too much for some buyers.
The reduced demand means Nigeria is not benefiting as much as others from a rebound in Brent crude prices, which is partly driven by its own oil outages.
Source: Punchng.com
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