With India signing an agreement to import 0.6 million barrels of oil from the United States, Nigeria’s crude exports could further be threatened if new markets are not explored, a new report has revealed.
The research noted that India was Nigeria’s top crude oil buyer in five of the last six years.
Nigerian and Angola crude oil cargoes were said to be clearing slowly on Thursday in lacklustre demand with programmes due to emerge next week.
About 30 Nigerian cargoes from April loading programme were still available, according to Reuters.
Analysts at CSL Stockbrokers Limited noted that a recent report by the Energy Information Administration showed a gradual decline in crude oil imports by the United States to an average of 7.7 million barrels per day in 2018 from a high of 10.1 million bpd in 2005.
They said the development was occasioned by growing shale oil production with the US achieving the status of the top oil producer in 2018.
“This development has had severe impact on US crude import from Nigeria,” the analysts added.
According to the EIA report, between 2014 and 2015, before and shortly after the decline in oil prices, there were months that US imported no crude oil from Nigeria.
The CSL analysts said high production cost of shale oil coupled with the slump in global oil prices caused capital expenditure into shale production to decline substantially, forcing the US to ramp up imports from countries like Nigeria.
“However, following the recovery in oil prices in 2018, US shale production ramped up and consequently impacted imports from Nigeria. US crude oil import from Nigeria slumped 43.3 per cent from 112.9 million barrels in 2017 to 64.1 million barrels in 2018,” they said.
The EIA data showed that US crude imports from Nigeria declined year-on-year in each quarter with the third quarter recording the steepest decline, down 77.8 per cent to 5.5 million barrels (lowest in 12 quarters).
“Going forward, with stability in oil price, we think US would be able to sustain and possibly ramp up shale oil production which could further impact crude import from Nigeria,” the analysts added.