The Nigerian National Petroleum Company Limited (NNPC Ltd.) has shed light on how the ongoing Russia-Ukraine crisis has disrupted Nigeria’s crude oil inflow into the international market, affecting demand in the Asian market and prompting a notable shift towards European markets.
According to Femi Soneye, Chief Corporate Communications Officer of NNPC Ltd., while speaking at the Argus European Crude Conference in London, Maryamu Idris, Executive Director of Crude & Condensate at NNPC Trading Limited, highlighted the repercussions of the conflict between Russia and Ukraine on Nigeria’s crude exports. She explained that the conflict has led to a situation where India, traditionally a significant destination for Nigerian crude, has turned to discounted Russian barrels, resulting in a decline in Nigerian volumes exported to India.
Idris revealed that Nigerian crude exports to India fell from approximately 250,000 barrels per day (bpd) in the six months before the conflict’s onset to just 120,000 bpd this year. In contrast, Nigerian crude flow to Europe has increased as it fills the supply gaps left by the ban on Russian crude. Six months before the war, 678,000 bpd of Nigerian crude grades were heading to Europe, which increased to 730,000 bpd so far in 2023.
She emphasised that Nigerian crude has become a significant component for European refiners post-war, particularly distillate-rich grades like Forcados Blend, Escravos Light, Bonga, Egina, and the newly introduced Nembe Crude.
Idris also discussed the challenges faced by Nigeria’s oil production, including those exacerbated by the COVID-19 pandemic, such as reduced investment in the upstream sector, supply chain disruptions, aging oil fields, and oil theft. However, she expressed optimism that these challenges are diminishing, thanks to the introduction and implementation of a new framework for the domestic petroleum industry in 2021.
The Petroleum Industry Act (PIA) of 2021 has revitalized the industry and positioned NNPC Limited to adopt a more commercial approach to managing Nigeria’s hydrocarbon resources. NNPC Limited has also secured essential partnerships with financial institutions to promote upstream investments for sustainable production growth.
Idris announced that NNPC Limited is actively addressing security and environmental challenges in the Niger Delta, in collaboration with host communities and private stakeholders, to further boost production growth. In September 2023, Nigeria achieved its highest crude oil and condensate output in nearly two years, reaching 1.72 million barrels per day.
Furthermore, NNPC Limited is expanding its presence in the downstream sector, aiming for a ‘wells-to-wheels’ approach to take Nigeria’s hydrocarbon products closer to end-users. This strategy is being carried out through the restructured NNPC Trading Company, which focuses on growing NNPC’s global market presence in crude, condensate, gas, and petroleum products.
The Argus European Crude Conference Panel Session, themed ‘The Invisible Hand: How Are Shareholders and Asset Managers Meeting the Crude Industry? What Does This Mean for the Future of Crude in Europe?’ featured James Gooder, Vice President Crude of Argus, as the moderator.