Demand for Nigeria oil falls in international market

Kunle Awosiyan with agency report |

There is a declining demand of the country crude oil in the international market as United States the biggest buyer of Nigeria oil gets domestic boom, a report has shown.

Data obtained from Bloomberg showed that horizontal drilling and hydraulic fracturing, or fracking, that unlocked supplies in shale formations in North Dakota, Texas and other states has boosted US output to the highest in more than three decades, forcing overseas producers, whose exports to the US are shrinking, to find new markets for their crude.

The report noted that the US has bought an average 30,000 barrels a day of Nigerian crude this year, shipping almost one million barrels a day from the country in 2010.

In addition, the US Energy Information Administration noted that while the United States once absorbed more than a third of Nigeria’s nearly two million barrels per day (bpd) of exports, this slumped to close to 60,000 barrels per day on average for the first three months of this year.

Energy sources stated that Nigeria is having a particularly hard time with the glut, as the shale boom in its once-key market the United States has all but shut out its exports.

According to oil traders, sellers of Nigerian crudes have aggressively pushed into new markets from Uruguay to China, but are coming up against other crude producers, including fellow members of the Organization of the Petroleum Exporting Countries, as well as new refineries that are geared towards heavier oil.

As a result, the traders said, as much as 10 million barrels of Nigerian grades that have already loaded are floating in vessels, taking months in some cases to find buyers.

In its effort to save the situation the Nigerian National Petroleum Corporation, NNPC, weekend, reduced the prices of Nigeria’s crude oil grades — Bonny Light and Qua Iboe — to their lowest points in over a decade.

The action, according to oil traders, was engendered by the need for the country to join in the fight for market share.

Specifically, the NNPC in a statement, weekend, said it will sell July supplies of Bonny Light crude at 23 cents more than Dated Brent. This, according to oil trading sources, was the smallest differential since 2005 and compares with a 50 cent premium in June and $2.55 a year earlier.

The NNPC also lowered the official selling price for Nigeria’s largest crude oil stream, Qua Iboe, to dated Brent plus 35 cents per barrel, the lowest differential since May 2005.