November 22, 2024
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The Nigerian National Petroleum Company Limited (NNPC Ltd.) has provided insight into how the lingering Russia – Ukraine war impacted Nigerian crude oil inflows in the international oil market.

The NNPC Ltd., said this led to a dip in demand from the once-dependable Asian market at the onset of hostilities in the Eastern bloc.

Maryamu Idris, Executive Director, Crude and Condensate, NNPC Trading Limited made this known in a panel presentation at the Argus European Crude Conference in London.

Idris, in a statement on Thursday by Mr Femi Soneye, Chief Corporate Communications Officer, NNPC Ltd, said Nigeria’s crude export to India dwindled.

According to Idris, in addition to the substantial price shocks impacting commodity and energy prices globally, the conflict triggered a situation where India, a primary destination for Nigerian grades, increased its appetite for discounted Russian barrels.

This, she said was to the detriment of some Nigerian volumes.

“To illustrate the extent of this shift, Nigeria’s crude exports to India dwindled from approximately 250,000 barrels per day (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194,000 in the subsequent six months afterwards.

“And so far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India,” she said.

On the other hand, she said Nigerian crude flow to Europe had increased in a bid to fill supply gaps left by the ban on Russian crude.

She explained that six months before the war, 678,000 bpd of Nigerian crude grades went to Europe, compared to 710,000 bpd six months later and 730,000 bpd so far this year.

“This trend makes it evident that Nigerian grades are increasingly becoming a significant component in the post-war palette of European refiners.

“Several Nigerian distillate-rich grades have become a steady preference for many European refiners, given the absence of Russian Urals and diesel.

“Forcados Blend, Escravos Light, Bonga, and Egina appear to be the most popular, and our latest addition — Nembe Crude – fits well into this basket.

“This was a strong factor behind our choice of London and the Argus European Crude Conference as the most ideal launch hub for the grade,” Idris said.

Idris said Nigeria faced production challenges aggravated by COVID-19 pandemic, including reduced investment, supply chain disruptions, ageing oil fields and oil theft, contributing to production declines in the second half of 2022 and early 2023.

She, however, said that the challenges were fast becoming a thing of the past with the implementation of a new framework for the domestic petroleum industry (PIA 2021), rejuvenating business landscape and repositioning NNPC Ltd for a more commercial approach.

According to her, NNPC Limited has secured vital partnerships with notable financial institutions to promote upstream investments to restore and sustainably grow production capacity in the coming years.

“NNPC Limited is championing concerted efforts in partnership with host communities and private stakeholders to address the security and environmental challenges in the Niger Delta to further fortify production growth.

“We have already begun seeing significant progress on the rebound. In September 2023, Nigeria recorded its highest crude oil and condensate output in nearly two years, reaching 1.72 million barrels per day.

This, we believe, is just the beginning of our production rebound.

She affirmed that NNPC Limited was also increasing its participation in the downstream sector in line with a ‘wells-to-wheels’ approach, taking the country’s unique hydrocarbon molecules as close as possible to end-users.

The vehicle for this, she said, is the restructured NNPC Trading Company, focused on growing NNPC’s presence in the global market for crude, condensate, gas, and petroleum products.

The Argus Crude European Crude Conference Panel Session was held with the theme: “The Invisible Hand: How Are Shareholders and Asset Managers Meeting the Crude Industry? What Does This Mean for the Future of Crude in Europe?” (NAN)

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