By Jeph Ajobaju, Chief Copy Editor
After a lull for days, independent Chinese crude oil refiners and other buyers in Asia are helping boost demand, raising differentials especially for heavy West African grades, including Nigeria’s.
Despite apprehensions of a slow uptake last week, less than 20 Nigerian cargoes now remain for April-loading, as buyers seek deals on the overhang.
In the medium term, Nigeria may also sell more to India, as that country reduces imports from Iran now feeling the ire of Washington.
Reuters quotes traders as saying that Chinese demand is picking up after March-loading West African grades were snapped up rapidly ahead of the Lunar New Year but trades more slowly for April.
Nigeria’s top grade Qua Iboe and Bonny light have trended up and are being offered at around dated Brent plus $2 per barrel (pb).
Traders said the differentials seem well supported by robust demand, especially from independent Chinese refiners.
Two days ago, Qua Iboe for April had been offered at dated Brent plus $1.70 to $1.80 pb.
Newly issued buying tenders are in focus, and Exxon has sold some April-loading Qua Iboe.
Exxon is offering May-loading Qua Iboe at a more ambitious dated plus $2.20, traders told Reuters.
Raising Nigeria’s output
Even with output curbs by the Organisation of Petroleum Countries (OPEC) Nigeria is laying plans to pump more and extend market for its oil, which accounts for 95 per cent of its foreign exchange earnings.
On March 14, Nigeria, Sao Tome and Principe and Total SA signed an oil production sharing contract.
Nigeria wants to jerk up production from 1.78 million barrels per day (bpd) to 2.2 million (bpd) this year, although its OPEC quota is 1.74 million bpd.
In the production sharing contract, Total will prospect for oil in three blocks.
Nicholas Terraz, Managing Director of Total E&P, said the company would take on 100 per cent of the financing, but may seek partners as discoveries are made.
The estimated reserves of the blocks – 7, 8 and 11 – were not disclosed, but Total will be the first to do seismic studies.
India may buy more from Nigeria
Nigeria may sell more oil to India, its largest buyer after the United States.
India’s oil imports from Iran in February dipped by over 60 per cent from a year ago to about 260,000 bpd as New Delhi cuts imports under a sanctions waiver deal with Washington.
Last November, the U.S. introduced sanctions to cripple Iran’s oil revenue-dependent economy but gave a six-month waiver to eight nations, including India, which allowed them to import some Iranian oil.
India is allowed by Washington to continue to buy about 300,000 bpd oil till early May.
India’s February imports from Iran were about 4 per cent lower than January’s purchases.
Iran was the eighth biggest oil supplier to India in February compared with seventh in January, and slipped from third position it held a year ago.
In February, Tehran’s share in India’s overall oil imports reduced to about 5 per cent from about 14 per cent a year earlier.
