NNPC cuts July oil price to 10-year low as 15 cargoes remain unsold
NNPC-Tower
U.S, China, India abandon Nigeria’s product
AGAINST unsavoury background of global market glut, Nigeria’s crude oil’s appeal to consuming nations may have sagged further, with over 15 cargoes remaining unsold for July delivery alone.
The fortunes of August and September deliveries remain uncertain, even as oil prices continue to hover on the lower band of $58.51 a barrel.
Already, the Nigerian National Petroleum Corporation (NNPC) has cut its July official selling price formulae for Bonny Light and Qua Iboe to 10-year low.
The Organisation of Petroleum Exporting Countries (OPEC), which made this disclosure in its July oil market report released yesterday, said that an overhang of around 15 unsold July cargoes emerged a week after the August programme. Nigeria has been struggling to find buyers of its crude oil for some years now without success.
For instance, in 2012, China became the alternative market for Nigeria’s crude oil, following dwindling imports by the United States, which was the major buyer of Nigeria’s crude oil.
But, China has also abandoned Nigeria’s crude oil as their demand for light sweet crude oil is very sparse.
Also, India had the largest buyer of Nigerian crude, which has been one of the positives for the country in the last few years. But demand from India for Nigerian crudes is slightly on the wane as its demand for Latin American crudes is growing sharply.
The United States, Energy Information Administration (EIA) stated in its recent report that “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.”
OPEC stated that loading delays also hurt certain Nigerian grades as refiners looked for more reliable alternatives. “Moreover, West African (WAF) crudes were undermined by plentiful supply and relatively high fright rates for their cargoes, making cheap North Sea and Mediterranean grades more attractive to some European buyers.
“Spot differentials for physical crude related to Brent were hammered over the month with an oversupply of light sweet crude in the Atlantic Basin. Low U.S. demand for light sweet imports has left a backlog of unsold cargoes in the Atlantic Basin,” it stated.
The report added that although all three markets remained in contango, the Brent contango widened over June by close to 25¢, to reach $1.31/b (M1-M3).
It added that a surplus of unsold prompt loading North Sea and West African crude cargoes has been putting prompt differentials under pressure. “Supply has been strong and European and Asian refineries have not bought as much crude as expected. Strong production from the Buzzard field and the deferring of a maintenance shutdown to October from June has boosted supplies. The North Sea was also cluttered with tankers carrying cargoes that have failed to find buyers, despite European refineries running hard to take advantage of strong margins.
“Struggling to find buyers, unsold cargoes of West African crude began to stack up, seeking a window of opportunity to return to the U.S. market. Theoretically, the narrowing spread has made it about $2pb cheaper to import West African crude than to ship Bakken by rail from North Dakota.”
It disclosed that crude imports from OPEC Member Countries dropped in April from the previous month by 96 tbpd or four per cent, accounting for 35 per cent of total U.S. crude imports. On the contrary, U.S. product imports from OPEC Member Countries increased by 31 tbpd from the previous month to stand at 192 tbpd, representing a 10 per cent share of the total products imported by the U.S. showing a drop of 30 tbpd from the same month last year.
The report stated: “In May, China’s crude imports dropped by 1.8 mb/d or 25 per cent from the previous month to average 5.5 mb/d, while on an annual basis, they decreased by 670 tbpd or 11 per cent. Year-to-date, the figures reflected an increase of 279 tbpd or five per cent.
In terms of supplier share, Russia, Angola and Saudi Arabia were the top crude suppliers to China in May, holding shares of 17 per cent, 14 per cent and one per cent, respectively. In May, China’s crude imports saw increased volumes from Russia, which were up by 156 tbpd from the month before, while imports from Saudi Arabia decreased significantly by 562 tbpd from April.
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24 Comments
Refine locally, stop this subsidy rubbish.
All the above suggestions are okay but unless we focus more on mechanized agriculture, industrialization and efficient academic institutions, Nigeria may at the end of the day find it hard to be a great nation unless in ballooned population. It is high time we move a little away from oil and turn to groundnut pyramid, palm oil and cocoa days.
Furthermore, governance should be like civil service that will have rules and regulations and the cost as low as that of civil service.
Nigeria should reduce imports from those countries too. If you bought oil from me and l bought cars from you and suddenly you stopped buying my oil, the only means to purchase your cars, then the only thing to do is stop buying your cars. Reduction of imports creates over capacity in those advanced countries too. Nigeria should diversify her economy and live within her means.
This is very good news! At least no new funds for the politicians to steal
The handwriting has been on the wall for years……..very soon, to refine locally will be the only option. With this Iran nuclear deal, let’s brace up for more unsold cargoes……….deregulate the price and subsidize production and not consumption. Let the forces of demand and supply determine consumption price…..
We have a huge population that will consume but we are not taking advantage of it……
My two kobo
Anyone who opposes subsidy removal is an enemy of Nigeria. Let us refine our oil, feed the domestic market and export the excess to ready markets. The era of exporting raw commodities should have been over for Nigeria decades ago. Let us begin to think away from crude oil, let us begin to think and act beyond oil as the only basis of our national existence. We flippantly claim that Nigeria is endowed with abundant human resources, but what are we doing with the humans we have? Humans without skills, technical know-how, basic education, good health, decent work ethic, motivation to create, to innovate and to excel; are not human resources, they are human liability. So, let’s stop deceiving ourselves that oil wealth will last forever, that street beggars are human resource, that exporting unprocessed minerals will make us prosperous, that relying on other nations for all our infrastructure needs will develop our country.
spot on my brother, humans without skills-our education is job seeking oriented not job creation oriented. We think buying and selling will improve our economy.
Even though I agree with you about the need to refine locally, opposing the subsidy removal does not make one an enemy of Nigeria. There are many paths to success, not just the ones you can see.
I agree with you Simon, there are many paths to growth and development that I do not see. But I have given you some cursory insight to the ones I know, why not give me and other readers some clue to the ones you know which we do not see.
Sadly we are beginning to see years of meticulous planning, strong economic alignment & ties, high powered political negotiations with national policies biased towards each nations’ survival and her economic prosperity
In Nigeria we the citizens live our lives as if the world will wait for us to get it right.
Like, the world will wait until we decide to hold our leaders from home, LG,Governors, Political appointees, President responsible for their actions and inactions.
Like the world will wait until we suddenly realize that every bad leadership, bad policies, anti-people reforms must be protested until they change their lukewarm stands and actions to our national well being even if it means running the economy aground or stampeding our leaders until they rescind decisions and policies that are not in the interest of the citizenry.
Even in the jungle, there is territorial laws and failure observe or willful or negligent stray into unfriendly grounds or enemy territories gets punished with no mercy.
Our leaders, President or any one should begin to feel the wrath of pure, angry, frustrated citizen via ultimatum by vibrant unions, legal means, protest and when all these fails via jungle justice.
What we have now are vision-less leaders who aspire to rule a country for the purpose of inflicting more damage with no clear-cut thought out plan for the next 10years.
What we would like to see is a country who take seriously the issues of who lead them and to where. Country who have plans about where they see themselves in 1 , 5 and in 10 years or in 50years like China and have carefully planned their economic allies in light of their goals.
Until we stone to death, all those who have ruled these country aground,
Until we stand in the street and demand better economic policies, visible economic dividend, massive infrastructural development, clear diversified resource base and clear long term plan of what we want to be, where we want to be, how we want people to regard us and what is our international economic policies viz a viz Bilateral agreement,trade negotiation/treaty; am afraid we will have leaders our political passiveness deserves.
great comment. nigerian’s really don’t care. we continue to vote none creative leaders ie governor. we continue to allow this criminals to inflict pain and suffering on our nation. a country so blessed with everything, yet we are the poorest. change must happen with will power, with action and continued pressure.
what the nigeria govt and NNPC hasn’t figure out, is that the world is moving away from importation of oil, so many country with new technology are developing their own oil fields, and now iran is coming online also. this means nigeria has to find markets for it oil. we have an economy in desperate need of oil, power and gas . yet NNPC hasn’t done anything to develop that, they would rather focus on exporting this product. if really focus was directed toward domestic use, we would not have fuel scarcity, we would not have power failure and we would be the supply to most of africa for refined product. it is time we dismantle NNPC.
“Also, India had the largest buyer of Nigerian crude, which has been one of the positives for the country in the last few years. But demand from India for Nigerian crudes is slightly on the wane as its demand for Latin American crudes is growing sharply.”
Someone is wrong. Either this reporter or this one who says Nigeria’s is now India’s largest supplier of crude (overtaking Saudi Arabia): https://www.thisdaylive.com/articles/nigeria-overtakes-saudi-arabia-in-crude-oil-export-to-india/212998/
How can you know our export is slightly on the wane when the most recent evidence we have suggests otherwise?
i was also thinking….cos i read just the other day that india and spain have great appetite for our oil.
Nah! Only the naive and dull depend on other people,a appetite.A real nation redefines its competitive edge and pursues the dream.Nigeria has slept soundly since 1960 and should wake up.You dont build a nation by mistaking crude,noisy politics for progress..Never done.Time is no longer a friend to nigeria
Buhari has woefully in his predictions :- USD will sell at N1, Crude oil prizes will rise internationally. WHAT*S GOING ON.. Boko is increasing attacks. na wao.
After all said and done, the solution to the problems its clearly defined: Nigeria has a massive demand for refined products from oil and gas. the NNPC now needs to know that the only viable option is to get our refineries back to operation at full capacity. Supply the refined products in Nigeria and other nearby countries who are always in need of the refined products. There is always a great advantage getting the crude oil refined in our country its just that the hood lumps behind the doors wants to always make away with the massive money incurred by refining it out of our borders. But I guess they will soon be trapped on a rat trap. The end is very near for the hood lumps. The earlier NNPC buys the idea to fix the refineries in Nigeria back to full capacity the better.
AND THESE FACTS WILL NOT SURPRISE ANY REASONABLE PERSON AS THE PRINCIPAL COMPANIES LIKE DUKE OIL IN LONDON, ETC THAT HANDLE THIS EXCESS CRUDE ON BEHALF OF THE NNPC ARE ALL OFF SHORE COMPANIES AND THE BANK ACCOUNTS ARE IN OFF SHORE BANKS. NO PERSON KNOWS WHO THEIR ACCOUNTING OFFICERS ARE OR WHO THEY REPORT TO OR WHO GIVES THEM INSTRUCTIONS. THIS HAS BEEN THE ARRANGEMENTS FROM DAY ONE AND THIS IS HOW THEY MASSIVELY LOOT AND STEAL OUR MONEY AND WEALTH. THIS SYSTEM ACTS AS THE ATM CASH MACHINES FOR ALL PAST HEADS OF STATE, FROM BABABGIDA, TOP PERSONS IN THE NNPC PAST AND PRESENT. SOME MILITARY LEADERS AND SOME TOP POLITICIANS. THIS IS THE REASON WHY NOBODY AND I MEAN NOBODY CAN SUCCESSFULLY PROBE THE NNPC. I SINCERELY HOPE THAT PRESIDENT BUHARI WILL GO INTO THE ROOT OF ALL THESE VERY OBSCENE ROT, MASSIVE LOOTING, UNHEARD OF STEALING AND OH MY GOD BEHAVIOURS OF THESE VERY SHAMELESS LOOTERS. IT IS ONLY THE PERSON AND PERSONALITY OF BUHARI, WITH THE BLESSING AND SUPPORT OF THE ALMIGHTY GOD THAT CAN REDEEM US FROM THESE ROBBERS
pig your buhari will disappoint you. look for what to do as the time of famine is near.
PRESIDENT BUHARI NIGERIANS WILL BE VERY PATIENT WITH YOU, BECAUSE WE ALL KNEW THE VERY TERRIBLE MESS GOODLUCK JONATHAN AND HIS GOD FORSAKEN ADMINISTRATION LEFT FOR YOU AND NIGERIANS. UNDER THE WATCH OF GOODLUCK JONATHAN WE HAD THE MOST CORRUPT, INEPT, CLUELESS, ILL PREPARED AND I DO NOT CARE ADMINISTRATION IN THE HISTORY OF NIGERIA. HIS ADMINISTRATION STOLE AND LOOTED VERY MASSIVELY WITH IMPUNITY, EMPTIED OUR TREASURY, COLLECTED FOREIGN LOANS VERY RECKLESSLY AND LEFT NIGERIA VERY BROKE. PRESIDENT BUHARI PLEASE MAKE SURE THAT THESE WRECKERS OF NIGERIA MUST NOT BE ALLOWED TO GET AWAY WITH THEIR LOOTS AND MUST BE PUNISHED VERY SEVERELY FOR THE HAVOC AND IRREPARABLE HARM THEY CAUSED NIGERIA AND WE THE PEOPLE BELIEVE YOU CAN DO THIS, USING ALL DUE VERY DILIGENT AND VERIFIABLE LEGAL PROCESSES PRESIDENT BUHAHI THE ALMIGHTY GOD WILL ALWAYS GUIDE AND PROTECT YOU.
pig
777
#NAIJAGOVBUYNAIJA
“Government of the people” it is
time to stop all these tariff increases or blocking our access to
hard currency.
Let us get to the root of our issues,
apart from corruption, we need to start:
Providing power or gas 24/7 to
existing industrial zones or build new zones and powering them. You
do not need FDI, your brothers and sister that ran away because of
power will bring their money back and attract new ones will as well.
This will provide employment.
Provide loans at low rate not 25%
(effective rate) to manufactures. How come when developed economies
are in recession, they reduce their interest rate to zero or close
to zero? Production of goods CAN NOT BE DONE at 25% rates, only
buying and selling.
Lastly let make #NAIJAGOVBUYNAIJA.
This will
have a quick boost to our economy. Local production will be consumed
and keep local employment going with NO need to put tariffs on used
cars etc. Remember by law the governments have taken all our
resources and we do not have anything to show for it. We have to
build our roads, provide our water, light, security and sewage.
The
#NAIJAGOVBUYNAIJA program
will go as fellows:
All
governments Federal, State and Local governments and all agencies
must buy locally assembled cars ( it happen in the 70s). And leave
the poor man to his tokubo.
All
food and drinks, and household items (dishes, soap etc) at official
functions and resident must be produced locally.
All
clothes, shoes etc. worn by high end official at official resident
or function must be produce locally.
All
air conditioners used in official structures must be assembled in
Nigeria
Some education for Nigerian policy makers. The US is no longer buying oil from anyone. With shale oil and fracking, the US produces all the oil it needs and now exports. The US has become the largest producer in the world.But that is just a tip of the problem for oil producers. It is bound to get worse because of alternative sources of energy. Solar, wind, etc. Most automobiles now burn less petrol, with the invention of hybrid and electric cars. Take Tesla for instance, the best selling car in the world, it does not use oil. And Toyota and others are just releasing cars that use hydrogen. On top of all that, cars are now required to be more energy efficient. The latest Volkswagen Passat can run for 800 miles on a full tank. Nigeria, the days of oil are going. It’s time to think about another source of income. Nigeria is not a productive country. So many holidays, little investment in education, infrastructure and industry. All the governors waiting for handouts from Abuja. That is not how great nations are made. Nigeria has a big problem and oil will not solve it. Not anymore.
The oil windfall symphony must go diminuendo.Its time to dream the economic diversification mantra seriously
We will review and take appropriate action.