The Nigerian National Petroleum Company Limited (NNPCL) says the lingering Russia-Ukraine war has impacted Nigerian crude oil inflow in the international oil market.
The NNPCL said the war led to a dip in demand from the Asian market at the onset of hostilities in the Eastern bloc.
The Executive Director, Crude and Condensate, NNPC Trading Limited, Maryamu Idris, said this in a panel presentation at the Argus European Crude Conference in London, the United Kingdom.
Idris stated that in addition to the substantial price shocks impacting commodity and energy prices globally, the conflict between Russia and Ukraine has triggered a situation where India, a primary destination for Nigerian grades, increased its appetite for discounted Russian barrels 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 was quoted as saying in a statement issued by the NNPCL spokesman, Femi Soneye, on Wednesday.
Idris further noted that the Nigerian crude flow to Europe has increased in a bid to fill supply gaps left by the ban on Russian crude, pointing out 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.
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She added: “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.”
On production challenges, Idris said like many other oil-producing countries, Nigeria had faced production challenges aggravated by the COVID-19 pandemic, including reduced investment in the upstream sector, supply chain disruptions impacting upstream operations, ageing oil fields, and oil theft by unscrupulous elements.
These factors, she said, contributed to production declines in the second half of 2022 and early 2023.
Idris, however, noted that the challenges are fast becoming a thing of the past with the introduction and implementation of a new framework for the domestic petroleum industry (the PIA of 2021), rejuvenating the business landscape, and re-positioning NNPCL to adopt a more commercial approach to the management of the nation’s hydrocarbon resources.
According to her, NNPCL has secured vital partnerships with notable financial institutions to promote upstream investments to restore and sustainably grow production capacity in the coming years.
She said: “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. Suffice to say 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 in addition to sustainably growing upstream production volumes, NNPCL is 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.
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