W’African Crude Oil Exports Hit 13-month Low | Independent Newspapers Limited
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W’African Crude Oil Exports Hit 13-month Low

Posted: Sep 3, 2015 at 12:13 am   /   by   /   comments (0)

• Drop Threatens Nigeria’s Revenue Projection – DG, LCCI

By Oladunjoye Phillip,  Lagos (With agency reports)


These indeed are hard times for West Africa’s oil producing nations of Nigeria, Cameroon, Cote d’Ivoire, Mauritania, Congo and Gabon, as the supplies of their crude to Asia remains on a steady decline.

A report by Reuters on Wednesday, based on a shipping data and survey of traders, indicated that West African crude oil exports to Asia fell by 28.2 per cent from 2.34 million barrels per day in April to 1.68 million bpd this month, the lowest since August 2014.

barrels-of-oilAccording to the data, the total cargoes of crude supplied in August to Asia was 60 as against the 53 that would be supplied in September.

Based on the data, Angola, Nigeria and neighbouring countries are expected to export about 28 cargoes to China in September and 15 to India, down from 30 and 25 respectively last month.

The West African nations were not alone, as the report also noted that supply from the Organisation of Petroleum Exporting Countries (OPEC) fell in August to 31.71 million bpd, from a revised 31.88 million bpd in July.

It noted that oil has weakened due to surging output and is trading below $50, not far from a more than six-year-low level, to $42 reached last month.

The report noted that crude flows to Asia have fallen from 2.34 million bpd in April due to seasonal refinery maintenance and lower refining margins as well as fears of weakening demand growth.

Another reason for the falling crude supply, according to the report, was the plan by India’s Essar Oil to shut its 400,000bpd Vadinar refinery from mid September for a month; and the force majeure declared by Royal Dutch Shell on Bonny crude exports from Nigerian on August 27, it said could have a bigger impact in September.

Indian refiners are also believed to have become more selective in the grades of oil that they seek to purchase, making it tougher for sellers of Nigerian crude to sell to the region, even as exports to China have held up relatively well, many cargoes heading to China are expected to go into storage.

This, it said, was because Chinese refiners are cutting output in the face of low margins, adding that traders have also said that Chinese imports in October are likely to fall further as purchases of Angolan oil have been substantially slower than in recent months.

On the implications of the falling crude supply on the Nigerian economy at a time price remains below the 2015 budget benchmark price, Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, in a telephone interview with Daily Independent expressed fears for the nation’s revenue projections.

He said: “Oil is the mainstay of the economy. Revenue position will be difficult to manage. It will also affect our foreign exchange market. The mechanism to fund foreign exchange will be affected. It will also affect our foreign reserve. The consequences are very adverse but we hope it will be for a short time.”

He advised that the Federal Government should adjust immediately to the changes but in the long run, look at diversifying the economy.

“We should also look at refining the crude locally and export. If you export refined product the value will be higher,” he said.

Also commenting, an oil industry expert, who craved anonymity, agreed with Yusuf, even as he urged government to seek other ways of generating revenue, recalling that the Federal Government is still toying with the possibility of “Value Added Tax (VAT) from five to 10 per cent.

Instead of this, he wants government to “look at other areas like agriculture. The price of oil will be down for a long time. Our leaders should look inward and see other mineral resources that we can harness. Even, the price of oil that they put at $70, are artificial. They should do something before the realities of what is happening globally starts to stare at us in the face.”