Tag Archives: Nigeria’s Crude

NNPC Issues Guidelines For Sale, Purchase Of Nigeria’s Crude

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In its renewed bid to ensure transparency in all commercial activities relating to petroleum operations in Nigeria, the Nigerian National Petroleum Corporation (NNPC) has released the guidelines for the participation of local and foreign companies in the sale and purchase of the various grades of Nigerian crude oil.

The release of the guidelines is coming a few weeks after the corporation initiated measures to make the yearly Offshore Processing Agreements (OPAs) between it and oil traders more transparent.

But while the latest guidelines are in relation to the sale and purchase of Nigeria’s crude oil, OPAs and oil swap agreements are only in respect of the 445,000 barrels of crude oil per day allocated to the NNPC for the country’s refineries.

Details of the guidelines for the sale of the country’s crude, which were published monday, requires companies that wish to participate to show evidence of yearly turnover of $750 million; a minimum net worth of $300 million; ability to establish an irrevocable Letter of Credit for the payment of any allocated crude oil, subject to the terms of the contract; and ability to pay an initial deposit of $2.5 million, representing three lifting deposits upon signing of the contract agreement.

Read More: thisdaylive

China Ignores Nigeria’s Crude, FG Searches For Buyers

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Nigeria has a lot to do to woo buyers following the decision of China to ignore crude from Nigeria. This is happening at a time when the country has become the biggest casualty of the rising United States shale oil production.

China is the second largest consumer of crude oil, and when it does not figure at all as one of your regular buyers, you know you have a problem. And Nigerian crude is suffering because of this. China likes crude oil that is heavy and sweet, as it fits the appetite of its refineries that produce a lot of fuel oil to keep its industrial and manufacturing economy running, according to a data from the US Energy Information Administration, EIA.

The EIA noted that China also has a lot of complex and sophisticated refineries that can still produce middle distillates by distilling heavy crude oil, making the refiners much better margins.

Consequently, China ignores Nigerian crude for now, as their demand for light sweet crude oil is very sparse. It is high time Nigeria found a way to attract its crude oil to China, it noted.
Crude exports

In 2014, about 45 percent of Nigerian crude exports went to Europe, according to the EIA data. But the issue for Nigeria is that it is so dependent on a region where crude demand is stagnant as a lot of economies are still stumbling and it needs to find demand in countries that are growing, particularly in Asia.

Nigeria’s condition is made worse by the fact that it has become the biggest casualty of rising United States shale oil production
Until about seven years ago, the US, which remains the largest oil consumer in the world, used to buy more than 1 million barrels per day of light sweet Nigerian crude oil, which was almost 50 percent of Nigerian oil exports at the time. In 2014, only three percent of Nigerian exports went to the US, according to the same data published by the US EIA.

Nigeria lost its biggest buyer, and the reason has been attributed to the dramatic rise in US shale oil production.
US shale oil is said to be extremely similar in quality to light sweet Nigerian crude oil, and as more and more shale basins were discovered in its own backyard, the US did not need any more oil from Nigeria.

Last year, there were six weeks in a row starting from early July during which the US did not import a single barrel of crude oil. This was the first time that the US had not imported any Nigerian crude oil for such a length of a time, since US EIA started compiling this data almost four decades ago.

Read More: vanguardngr