Nigeria’s oil export gains 30 kbd in November

Nigeria’s oil export gains 30 kbd in November

SOPURUCHI ONWUKA

Nigeria’s crude oil export volumes in the month of November rose to 1.98 million barrels per day just as revenue outlook from the country’s petroleum resources looks gloomier with the free fall of oil prices.

The November export figure indicated increase by 30, 000 barrels per day (30 kbd) on the 1.95 million barrels per day (mbd) pumped by the country in October but some 40 kbd short of the 2.02 mbd pushed to the market in September.

Before September, the country had maintained as export plateau of 1.96 mbd in July and August, according to a table of output figures on members of the Organization of Petroleum Exporting Countries (OPEC).

However, Nigeria’s marginal export surplus failed to yield any significant impact in the overall oil output from OPEC members to the market as the group’s total further plunged by 290 kbd from 30.30 mbd in October to 30.01 in November.

Apart from Nigeria, other countries that recorded export jumps include Ecuador whose export increased in the month by 10 kbd from 0.54 kbd in October to 0.55 kbd in November. Iraq also posted a 50 kbd from 3.06 mbd in October to 3.11 mbd in November.

Iran maintained October export level in November, posting 2.83 mbd in both months just the same as United Arab Emirates also posted 2.78 mbd for both months. Venezuela followed the plateau trend with 2.32 mbd for October and November respectively.

The other six members of the group recorded drops in export figures with Libya suffering the biggest loss with 210 kbd from 0.86 kbd in October to 0.65 kbd in Novermber. Angola dipped by 50 kbd from 1.69 mbd in October to 1.64 mbd in November.

Kuwait also lost 50 kbd in November to post 2.75 mbd, lowering export from 2.80 mbd in October, Qatar dipped by 30 kbd from 0.71 kbd in October to 0.68 kbd in November.

Saudi Arabia posted a 30 kbd decline from 9.63 mbd in October to 9.60 mbd in November. And Algeria dipped by 10 kbd 1.13 mbd in October to 1.12 mbd in November.

Analysts attribute Nigeria’s export improvement to reduced production losses that came with the commissioning of the Umugini pipeline by cluster operators in the Western Niger Delta which enhanced production by a group of indigenous players.

Seplat Petroleum has recorded less than 0.6% of oil theft on the 35 kilometre Amukpe to Rapele pipeline after it switched from Shell operated export conduit on which the operator complains of incessant attacks.

 It was the vandalism of the Rapele-Forcados section of the line that forced entire shutdown of Seplat’s production in the first 43 days of 2014. Seplat currently produces 73,000BOPD (gross).

Other Nigerian independents with adjoining pipelines to those operated by major companies have comparable experience with that of Seplat. “We have produced, non-stop from the Ogbele field for nine years since October 2005”, says Layi Fatona, managing director of Niger Delta Petroleum Resources (NDPR).

“We have never had a single day of shut in,” he explained.

Platform Petroleum, Midwestern Oil and Gas, Pillar Oil and Energia have also collectively streamed the common access Umugini pipeline to avert production losses and accounting diputes with Agip whose pipeline the group had used.

ENI is accused of throwing up stories of vandalism on its own pipeline to the extent that it calculates at least 15% losses, almost every month, for all the companies which put crude into the pipeline.

The production and export upsides in Nigeria positively coincided with news that cracking margins for West African crudes have risen on the US Atlantic Coast relative to the Bakken margin this month, widening the WAF-USAC arbitrage.

The USAC cracking margin for Nigerian Bonny Light crude has averaged $10.42/b so far in December, a $5.77/b premium to the margin for Bakken crude railed from North Dakota. In November, the Bonny Light cracking margin averaged $10.26/b, a $1.67/b premium to Bakken.

Margin data compiled by Platts reflects the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts product price assessments to yield formulas designed by Turner, Mason & Co.

While there has not yet been a rush to send West African cargoes to the US, the wider arbitrage appears to have lured a few more barrels into the USAC.

Platts cFlow ship tracking software shows a slight increase in vessels arriving in the USAC from West Africa in December. Five ships are due to arrive, up from three in November and two in October.

The Value arrived on December 1, from the Brass River terminal in Nigeria, and the Eagle Atlanta arrived on December 4, bringing crude from the Congo.

Three more ships are due to arrive in Philadelphia by December 17. The Toska is due on December 12, from the Escravos terminal in Nigeria, the Value on December 14, again from Brass River, and the Genmar Harriet on December 17 from the Kome Kribi terminal in Cameroon, from which oil from Chad is exported.

US refiners have cut their reliance on imported crudes in recent years, especially light sweet grades from West Africa and the North Sea, as North American production has soared. Still, refiners will sometimes increase imports when the price is right.

Demand for West African crudes remains weak, pushing spot price differentials lower. Bonny Light, for instance, was assessed at a 65 cents/b premium to Dated Brent Thursday, down from a $1.25/b premium November 3.

More than two-thirds of the January Nigerian crude loading program has yet to clear, market sources said, and even though the Angolan program is trading, deals are fetching lower price differentials. Fewer than 10 cargoes of Angolan crude remain available from the January program, although most of those are heavier grades, such as Pazflor and Saturno.

"From the January Angola program, you'll find that China has bought a lot of those cargoes. Roughly 10-12 cargoes went through term, another 30 cargoes are likely to go to Asia and so far the remaining 10 have gone to western buyers. Of that, very, very little is likely to make its way to the US, though some of it is difficult to see a destination on until you see the shipping data," said one trader earlier this week.

West African sellers are also finding steeper competition in Asian markets from Middle Eastern suppliers. Notably, Saudi Arabia has been aggressively lowering prices for its crude into Asia in order to hold onto market share. As a result, current Singapore margins now favor Saudi barrels.

The Singapore Arab Light cracking margin has averaged $3.22/b so far in December, a $1.83/b premium to the Cabinda margin, for instance. That was up from a discount of $1.28/b to the Cabinda margin in September.

As the US has backed out West African imports, prices for those crudes have fallen, bolstering margins in Europe and Asia.