NNPC Update
NNPC Reports a Drop in Demand for Nigerian oil in Asia as a Result of the Russia-Ukraine War.
NNPC reports a drop in demand for Nigerian oil in Asia as a result of the Russia-Ukraine war.
The Nigerian National Petroleum Company (NNPC) Limited has announced that the current conflict between Russia and Ukraine has affected Nigeria’s crude oil supply in the global oil market, resulting in lower demand from previously dependable Asian markets such as India.
NewsReport stated that according to a press release issued by NNPC’s Chief Corporate Communications Officer, Femi Soneye, this was revealed by the Executive Director, Crude & Condensate, NNPC Trading Limited, Maryamu Idris, at a panel presentation at the Argus European Crude Conference in London.
India’s crude supply is running out. Mrs. Idris stated that, in addition to the significant price shocks affecting commodity and energy prices around the world, the conflict between Russia and Ukraine has resulted in a situation in which India, a primary destination for Nigerian grades, has increased its appetite for discounted Russian barrels to the detriment of some Nigerian volumes.
“To illustrate the magnitude of this shift,” she explained, “Nigeria’s crude exports to India fell 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.” So far this year, only about 120,000 bpd of Nigerian crude has made its way to India.” Increased crude oil supply to Europe
On the other hand, she noted that the flow of Nigerian crude to Europe has increased in an effort to fill supply gaps left by the Russian crude ban, noting that 6 months before the war, 678,000 bpd of Nigerian crude grades went to Europe, compared to 710,000 bpd six months later and 730,000 bpd so far this year.
Idris said,
“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.’’More on oil production challenges
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, aging 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.
She said,
“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 it to say that we have already begun to see 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.
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.
