• Monday, April 15, 2024
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BusinessDay

Nigeria’s crude export faces further threat as US penetrates China

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 Not only has the United States (US) significantly reduced its imports of Nigeria’s crude oil, it has also started competing for destinations of Nigerian crude oil, a development that poses further threat to Africa’s top oil producer and second largest economy.

The US exported crude oil to China for the first time since November 2005 in January, according to data the US Energy Information Administration (EIA) released Thursday, reports Platts.

Andrew Yakubu, group man

aging director, Nigerian National Petroleum Corporation (NNPC), was recently reported to have said that China, a major exporter of Nigeria’s crude, had become the alternative market for Nigeria’s crude oil, following dwindling imports by the US.

Nigeria may be on course to losing its status of major exporter of crude oil to China to the US, as US crude oil exports to China averaged 9,000 barrels per day (bpd) in January, the EIA’s data show, representing 12.3 percent of the US’s total crude exports.

The other 87.7 percent of US crude oil exports – 64,000 bpd – was sent to Canada.

January’s crude shipments mark the first significant exports not bound for Canada since Costa Rica received 334,000 barrels of US crude in July 2011, EIA data show. Mexico received 5,000 barrels in May 2012. This marks the first shipments to Asia since September 2006, when 24,000 barrels were exported to South Korea.

Exports of crude oil have been heavily regulated in the US since the oil embargo in the 1970s. Monthly crude exports ticked up through much of the 1980s and 1990s, but fell back sharply in 2000.

Between 2000 and 2008, US crude oil exports were negligible. However, exports – primarily to Canada – have gradually moved up as domestic production has boomed.

The EIA had recently projected that US monthly crude oil production was expected to exceed the amount of crude oil imports later in 2013, for the first time since February 1995.

The projected change is primarily attributed to rising US crude oil production, particularly from shale and other tight rock formations in North Dakota and Texas.

In fourth-quarter 2014, monthly crude oil production is forecast to top 8 million bpd and net crude oil imports are expected to fall below 7 million bpd. The gap between monthly US crude oil production and imports is expected to reach 2 million bpd by the end of next year, according to EIA’s March 2013 Short-Term Energy Outlook.

Changes could happen to the timing forecast of the crossover between oil production and imports, based largely on uncertainties in supply conditions.

In January, US crude oil production stood at 7.005 million bpd, down 59,000 bpd from December’s 7.064 million bpd, but still at levels not seen since 1992.

 

FEMI ASU