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Weekly UpdatesBecause of their diesel- and gasoline-rich qualities, Nigerian crudes are much sought after by refiners on both side of Suez. Chinese companies, scrambling for light/sweet crudes from Nigeria and other West African countries, have offered to invest in Nigeria's downstream in return for long-term crude oil supply agreements and E&P blocks.
Chinese companies, including trading giant Sinochem, are major buyers of Nigerian crudes from the spot market. Refiner Sinopec and CNPC's unit PetroChina are lifting as much crudes are they can get under term deals with NNPC and other volumes from the spot market (see omt7NigrExp&GlobalPerspvAug13-07).
Nigerian Marketing & Pricing: NNPC's marketing unit sets its official selling prices (OSPs) for its seven export crudes at the level of Dated BFO, plus a premium, and in advance. It charges another premium for deferred pricing. IOC operators have often declared force majeure since 2003 after attacks on their delta installations. Shell's shut-in capacity on May 15, 2007 was 950,000 b/d, when sellers raised their price for sweet crudes like Qua Iboe to such high premia as $3/b above Dated BFO.
In November 2004 NNPC refused to set December and January 2005 OSPs below Dated BFO despite falling spot market differentials for Nigerian crudes. As a result, traders reselling term supplies bought from NNPC at OSPs incurred losses - over $1m each on cargoes resold on spot basis. Term clients later had to link spot sale prices to the OSPs. Only the main traders managed to avoid incurring losses, by selling to refiners such as those of China. NNPC's display of market power has upset trading clients who resell term crudes on spot basis (see omt7NigrExpAug15-05).
The US market is of strategic importance to Abuja. In March 2007 Nigeria overtook Saudi Arabia as the US's third-largest crude oil supplier, at 1.29m b/d, next to Canada (1.776m b/d) and Mexico (1.621m b/d). Saudi Aramco overtakes NNPC when delta unrest affects output and exports.
Shell's crudes are blended into three export grades: Bonny Light, 37.6? API with 0.13% S, a gasoline-rich blend known as Nigerian Light; Bonny Medium (Nigerian Medium) 25.7? API with 0.24% S, rich in gasoline and diesel/gasoil; and Forcados, 30.5? API with 0.2% S, rich in diesel/gasoil. They are popular among US, EU and Asian refiners. Shell has two terminals: Bonny Island and Forcados.
ExxonMobil's crudes are blended into Qua Iboe, 37? API with 0.1% S. Its Oso condensate is almost sulphur-free - both exported from Qua Iboe terminal.
Chevron's blend is Escravos, 36? API with 0.2% S, shipped by SBM from the Escravos terminal on the mouth of the Niger Delta. The terminal has been improved.
Agip has the most popular blend, Brass River, 43? API with 0.1% S, shipped from the Brass River terminal in the delta. Agip's parent ENI on July 12, 2009, declared force majeure on its exports after sabotage on a pipeline north of the Brass River field earlier in the week. This was just as the Movement for the Emancipation of the Niger Delta (MEND) on July 12 destroyed for the umpteenth time in previous weeks an oil installation belonging to Chevron. The attack on Agip's pipeline resulted in 24,000 b/d of output losses, translating to about 4,800 b/d of ENI's equity in Agip.
Total's JV has the Amenam light/sweet grade, plus a variety of crudes mostly of the Bonny Medium type. But they include the Odudu grade which is similar to Bonny Light. Total exports from the offshore Odudu terminal, close to Qua Iboe and Oso.
Texaco's blend is Pennington, 38? API with very little sulphur content. This crude, which commands the highest premium, is shipped from the Pennington terminal on the Apoi offshore platform.
Among producers under PSAs, Agip exports its share of an offshore JV separate from its Brass River JV with NNPC. A joint blend of crudes is exported by Addax, a Swiss-based Canadian firm operating fields sold by Ashland, and Monipulo Petroleum which is a small local firm producing crude from an offshore platform near Antan of Addax.
Petrobras and NNPC in 2005 signed an agreement on increased co-operation. This was to include Petrobras' export of ethanol from sugar cane in Brazil to Nigeria to be blended into gasoline in the west African country. This is important for both countries as the Brazilian ethanol is an ultra-clean fuel for motor vehicles.
Nigeria's crude oil exports in 2006 averaged 2.15m b/d. Of this total, 42% went to the US, 13% went to India, with each of France and Brazil having taken 6%. The next market was Spain, which accounted for 5% of Nigerian crude oil exports. The other markets were Italy (4%), the Ivory Coast (3%), South Africa (3%) and Canada (3%). The remaining 15% of Nigerian crude oil exports went to the Netherlands, the American Virgin Islands, Japan, Ghana, Chile, China, Germany, Cameroon, South Korea and Portugal.
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