• Sunday, July 14, 2024
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BusinessDay

Nigerian crude still favorite amongst Asian buyers

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Chinese imports of Nigerian crude, though relatively much smaller than previously, jumped 105 percent year on year to around 36,000 b/d over January-September 2014.

Angolan crudes did not find the same buying support from Asia, however, with nothing to offset the 1 percent decline in Chinese off take.

The regular Chinese buyers of Angolan crude are Unipec, Sinopec, CNOOC, ChemChina and Chinaoil, whose imports range across Cabinda, Kissanje, Nemba, Plutonio, Saturno, SaxiBatuque, Dalia, Hungo, Girassol, Mondo, Gimboa, Palanca, and Pazflor.

The decreased Angolan purchases and increased buying of Nigerian grades comes in an environment of an overall anemic growth in oil demand in China and India this year, though the rise in their crude imports has diverged.

India’s crude imports averaged around 3.75 mil b/d in the first nine months of 2014, down from 3.82 mil b/d in the same period of 2013, according to official data.

Chinese crude imports climbed 9% over the same period to an average 6.14 mil b/d, though a lot of the purchases have been flowing into the country’s newly built strategic storages.

Averaged out over the nine months, Japan’s Nigerian crude imports were about 5,300 b/d, up 51% from 3,500 b/d in the same period of last year.

Its Angolan imports, however, nearly halved to 3,600 b/d over the January-September period from around 7,000 b/d a year ago, METI data shows.

Japanese refiners take the bulk of their crude from the Middle East and Russia. In Africa, their biggest supplier is Equatorial Guinea, followed by Libya, Gabon, Congo and Algeria, according to official data from state-run Korea National Oil Corp.

Refiners in the North Asian country have been trying to diversify their supplies away from the Middle East, albeit against some hurdles, sources said.

Refiner SK Innovation is relatively better placed to diversify compared with its peers GS Caltex and S-Oil, which are joint ventures with foreign partners Chevron and Aramco Overseas Co. respectively, and thus limited to select suppliers, they said.

South Korean refiners collectively bought about 419,000 barrels of Nigerian crude over January-September, a paltry average of 1,500 b/d, though it was more than nil volumes in the corresponding period of 2013, KNOC data showed.

They bought no Angolan barrels in the nine months, versus around 700 b/d last year.

Angolan crudes, though, have found some new buyers in recent months in Asia.

The narrowing of the Brent/Dubai spread and the resulting arbitrage for WAF grades into Asia has seen the emergence of Taiwan’s Formosa, Malaysia’s Petronas and Japan’s TonenGeneral as active players, several of them buying Angolan grades.

Vietnam bought its first ever cargo of West African crude with the purchase of 1 million barrels of Congo’s light sweet N’Kossa through a tender by PV Oil for November delivery.

But these are all relatively smaller crude importers. Vietnam, Taiwan and Malaysia’s combined crude import needs currently average around 1.26 mil b/d, compared with the nearly 16 million b/d that Asia’s big four account for.

So who in India is lapping up more Nigerian barrels?

The predominant buyers are seen to be the state-owned refiners Indian Oil Corp. and Bharat Petroleum Corp. Limited, with Qua Iboe and Bonny Light the grades of choice, the shipping fixtures show.

Indian imports of Angolan crudes, meanwhile, declined 11% on year in the first nine months of 2014 to an average of around 128,200 b/d.

Japan and South Korea are relatively much smaller buyers of African crudes.

Japanese imports of Nigerian and Angolan crudes are few and far between.

The country imported Nigerian cargoes in January and September this year, and Angolan cargoes only in January, according to the latest monthly data available from the Ministry of Economy, Trade and Industry.

Meanwhile, imports of Russian crude, which afford a freight advantage to refiners in Japan and South Korea and also flow via pipeline to China, jumped 19% in the first nine months of this year compared with the same period of 2013.

The Asian four bought on average around 1 million b/d of Russian crudes over January-September, compared with a little over 857,000 b/d a year ago.

Chinese imports leapt 26%, which coupled with 9% more buying from Japan, offset a 16% decline in South Korean intake.

Chinese refiners take ESPO, Sokol, Vityaz and Urals, while their Japanese peers are regular buyers of spot Vityaz and ESPO barrels.

India is a relatively smaller buyer of Russian grades. In 2013, it recorded a purchase only in December, of about 1 million barrels of CPC Blend.

In the first nine months of this year, Reliance has taken on average around 25,300 b/d of CPC Blend.