Latest monthly report emanating from the Nigerian National Petroleum Corporation (NNPC) has shown that India has lost its spot as Nigeria’s biggest oil buyer to the United States of America. According to the NNPC, India bought 7.67 million barrels in May, down from 12.49 million barrels the previous month.
Before now, India has remained the single largest buyer of Nigerian crude oil in the past few years after the United States slashed its imports from the country on the back of shale oil production boom. The report has it that the Asian country imported as high as 14.61 million barrels of Nigeria’s crude in January; 11.64 million barrels in February, and 12.63 million barrels in March.
In December, its import of Nigeria’s crude tumbled by 8.6 million barrels to a record low of 5.82 million barrels, compared to the 10.11 million barrels purchased by Netherlands, which emerged the biggest buyer. Refiners in India, the world’s third biggest oil consumer, recently stepped up crude oil purchases from the US as cheaper alternatives have emerged due to a supply glut in the global markets.
According to the report, Indian Oil Corporation last month bought 1.9 million barrels of US crude in its second import tender seeking oil from the Americans, making it the first Indian refiner to purchase Eagle Ford shale oil. The latest purchase came after a previous import tender where the IOC bought 1.6 million barrels of Mars crude and 400,000 barrels of Western Canadian Select.
Media reports also have it that Indian refiners have turned their sights to crude from the US as they are keen to diversify their crude import sources as arbitrage opens due to global oil supply cuts. Rising production and supplies from the US have also made arbitrage economics feasible for Indian imports. India’s Hindustan Petroleum Corporation announced last month that it planned to buy low-sulphur oil from the US in the next few months for its 166,000 barrel per day Vizag refinery in southern India. The HPCL’s Finance Chief, J. Ramaswamy, said the company was evaluating if Nigeria’s sweet oil could be replaced with the US oil.
According to him, HPCL had the appetite to import a very large crude carrier containing two million barrels of the US oil every month. The US had in December 2015 removed the 40-year-old restrictions on its crude exports, following the rapid growth of its oil production from 2013 to 2015. Meanwhile, the US import of Nigeria’s crude oil rose to 55.78 million barrels in the first half of this year from 45.09 million barrels in the same period of 2016.
Meanwhile, the US Energy Information Administration revealed in its latest data that the country bought a record 10.24 million barrels from Nigeria in March, the highest monthly import since July 2013. But with developed countries planning to ban non-electric cars in few years’ time, Nigeria may have to rethink her over-dependence on oil.