The ongoing crisis between Russia and Ukraine has taken a toll on Nigeria’s crude oil exports, affecting inflows into international markets, according to insights provided by the Nigerian National Petroleum Company Limited (NNPC Ltd.).
In a panel presentation at the Argus European Crude Conference in London, executive director of Crude and Condensate at NNPC Trading Limited, Maryamu Idris shed light on the repercussions of the conflict.
Idris highlighted the substantial impact of the conflict on commodity and energy prices globally. She explained that the conflict triggered a situation where India, a primary destination for Nigerian crude, increased its appetite for discounted Russian barrels, leading to a dip in demand for Nigerian crude in the Asian market.
“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. So far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India,” she stated.
On a positive note, Idris mentioned that the Nigerian crude flow to Europe has increased to fill supply gaps left by the ban on Russian crude. Six 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.
“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,” Idris added.
She highlighted specific Nigerian crude grades, such as Forcados Blend, Escravos Light, Bonga, Egina and the latest addition, Nembe Crude, as popular choices for European refiners.
Addressing production challenges, Idris acknowledged that, like many other oil-producing countries, Nigeria faced difficulties aggravated by the COVID-19 pandemic, including reduced investment, supply chain disruptions, ageing oil fields, and oil theft. These challenges contributed to production declines in the second half of 2022 and early 2023.
However, she emphasised that the challenges are diminishing with the 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.
NNPC Limited has secured partnerships with notable financial institutions to promote upstream investments for sustainable growth in production capacity. Idris highlighted the company’s concerted efforts, in collaboration with host communities and private stakeholders, to address security and environmental challenges in the Niger Delta.
“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,” Idris affirmed.
In addition to growing upstream production volumes, NNPC Limited is increasing its participation in the downstream sector, taking a ‘wells-to-wheels’ approach. The restructured NNPC Trading Company is focused on growing NNPC’s presence in the global market for crude, condensate, gas, and petroleum products.
The panel presentation at the Argus European Crude Conference, moderated by James Gooder, Vice President Crude of Argus, had 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?’