With domestic demand for oil products starting to rise back to pre-COVID-19 levels, India, one of Nigeria’s largest crude oil buyers is buying more oil due to resurgent demand for gasoil, gasoline, LPG and naphtha.
According to global oil and gas consultancy FGE, India’s state-run refiners such as Hindustan Petroleum Corp. and Indian Oil Corp. have been on a buying spree, issuing a number of tenders for January and February -loading crude.
“It has been especially good to exporters like Nigeria and the U.S. whose crude produces more gasoline that’s in high demand as the pandemic pushes people to private cars instead of public transport,” FGE said in a note.
The report noted that spot crude imports into the world’s third-largest oil market will rise by 10 per cent to 15 per cent this year from 2020.
Read Also: FG, crude oil theft, pipeline sabotage is getting out of hand
“The pullback from traditional term suppliers came when refiners maximized throughput to align with the robust domestic demand recovery,” said Senthil Kumaran, FGE’s head of South Asia oil. “They were forced to scramble for spot supplies to bridge the shortfall.”
India has been one of the fastest-growing economies in the world, with industrialization widening its appetite for crude but, the impact of COVID-19 halted economic activities last year, however, a recent increase in gasoline demand reflects how gradually the economy is rebounding.
“Gasoline demand growth is expected to sustain because once you are used to private commuting, it’s difficult to shift back to public transport,” Hindustan Petroleum Chairman Mukesh Kumar Surana said. “Refineries will explore all possibilities to increase gasoline production.”
Bharat Petroleum Corp., India’s second-biggest state-owned refiner, has increased the proportion of spot crude purchases to about 45 percent from about 30 per cent normally, according to a statement from the firm’s Finance Director N. Vijayagopal. The company plans to keep about 40 percent of supply in at least the medium term.
West African crude exports to India — the world’s third-biggest energy consumer — averaged around 430,000 bpd in the first 10 months of 2020 compared with 600,000 bpd in 2019, according to commodity data company Kpler.
India is the largest buyer of Nigerian oil and its renewed buying has supported values at a time when Nigeria’s core European market has seen supply coming back online from Libya and a fall in demand as a result of fresh COVID-19 lockdowns.
Nigeria relies heavily on India’s patronage to meet its crude oil sales targets as the government aims to maximize its oil revenue to finance its N13.588 trillion 2021 budget.
