The lingering conflict between Russia and Ukraine has negatively impacted Nigeria’s crude oil inflows in the international oil market, the Nigerian National Petroleum Company Limited (NNPC Ltd.) has said.
Providing insight into how the crisis is taking its toll on the country’s crude oil performance, the company’s Executive Director, Crude & Condensate, NNPC Trading Limited, Maryamu Idris, disclosed on Tuesday the development had
led to a dip in demand from the once-dependable Asian market at the onset of hostilities in the Eastern bloc.
Idris who spoke in a panel presentation at the ongoing Argus European Crude Conference in London, said in addition to the substantial price shocks impacting commodity and energy prices globally, the conflict between Russia and Ukraine triggered a situation where India, a primary destination for Nigerian crude oil grades, increased its appetite for discounted Russian barrels to the detriment of some Nigerian volumes.
“To illustrate the extent of this shift, Nigeria’s crude exports to India dwindled from approximately 250,000 barrels perday (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194,000 bpd in the subsequent six months. So far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India,” Idris said.
On the performance of the country’s crude oil in the European markets, the Director reported that the Nigerian crude oil flow to Europe has significantly increased in a bid to fill supply gaps left by the ban on Russian crude.
Six months before the the Russia-Ukraine war, she said an average 678,000 bpd of Nigerian crude oil grades were pumped into European markets, compared to 710,000 bpd six months later and 730,000 bpd so far this year.
“This trend is evident that Nigerian crude oil 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. The Forcados Blend, Escravos Light, Bonga, and Egina appear to be the most popular crude oil grades, as well as 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 added.
On production challenges, Idris remarked that, like many other oil-producing countries, Nigeria faced crude oil production challenges aggravated by the impact of the COVID-19 pandemic.
Apart from the impact on the reduction of fresh investments in the upstream sector, Idris said the challenges were also exacerbated by supply chain disruptions impacting upstream operations, ageing oil fields, and crude oil theft and pipeline vandalism by unscrupulous elements.
These factors, she said, contributed significantly to Nigeria’s production declines in the second half of 2022 and early part of 2023.
Idris, however, noted that the challenges were fast becoming a thing of the past with the introduction and implementation of a new framework for the domestic petroleum industry (the Petroleum Industry Act 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.
On its part, she said the NNPC Limited 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 it to say we (NNPCL) 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 said.
In addition to sustainably growing upstream production volumes, Idris said the NNPC Limited was also increasing its participation in the downstream sector of the industry 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 explained, was 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 moderated by the Vice President, Crude of Argus, James Gooder, 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?’
