Nigeria’s crude oil affected by Russia-Ukraine conflict, says NNPC Ltd

The ongoing crisis between Russia and Ukraine has had a negative impact on the demand for Nigerian crude oil in the global oil market, especially from the Asian market, which used to be a reliable buyer of Nigerian oil before the war started in the Eastern region.

This was revealed by Maryamu Idris, Executive Director, Crude & Condensate, NNPC Trading Limited, who spoke at the Argus European Crude Conference in London, as part of a panel discussion.

She explained that the conflict between Russia and Ukraine has caused a lot of volatility in the commodity and energy prices worldwide, and also led to a shift in the preferences of some of the major importers of Nigerian oil, such as India.

She said: “To illustrate the extent of this shift, Nigeria’s crude exports to India dwindled from approximately 250,000 barrels per day (bpd) in the six months preceding the February 2022 invasion of Ukraine to 194,000 in the subsequent six months afterwards. And so far, this year, only around 120,000 bpd of Nigerian crude volumes have made their way to India.”

She attributed this decline to the fact that India, a primary destination for Nigerian grades, increased its appetite for discounted Russian barrels to the detriment of some Nigerian volumes.

However, she also noted that the Nigerian crude flow to Europe has risen as a result of the supply gaps created by the ban on Russian crude, saying that six months before the war, 678,000 bpd of Nigerian crude grades went to Europe, compared to 710,000 bpd six months later and 730,000 bpd so far this year.

She said: “This trend makes it evident that Nigerian grades are increasingly becoming a significant component in the post-war palette of European refiners. Several Nigerian distillate-rich grades have become a steady preference for many European refiners, given the absence of Russian Urals and diesel. Forcados Blend, Escravos Light, Bonga, and Egina appear to be the most popular, and our latest addition — Nembe Crude – fits well into this basket. This was a strong factor behind our choice of London and the Argus European Crude Conference as the most ideal launch hub for the grade.”

Idris also spoke about the production challenges that Nigeria has faced in the past year, which were worsened by the COVID-19 pandemic. She mentioned some of the factors that contributed to the production declines in the second half of 2022 and early 2023, such as reduced investment in the upstream sector, supply chain disruptions impacting upstream operations, ageing oil fields, and oil theft by unscrupulous elements.

She said: “NNPC Limited is championing concerted efforts in partnership with host communities and private stakeholders to address the security and environmental challenges in the Niger Delta to further fortify production growth. Suffice to say we have already begun seeing significant progress on the rebound. In September 2023, Nigeria recorded its highest crude oil and condensate output in nearly two years, reaching 1.72 million barrels per day. This, we believe, is just the beginning of our production rebound.”

She added that NNPC Limited has secured vital partnerships with notable financial institutions to promote upstream investments to restore and sustainably grow production capacity in the coming years.

She also said that NNPC Limited is increasing its participation in the downstream sector in line with a ‘wells-to-wheels’ approach, taking the country’s unique hydrocarbon molecules as close as possible to end-users.