Abuja, Nigeria | – Nigeria is considering extending the period of its crude oil lifting contracts beyond the current one-year term, in a bid to secure more export markets for its crude after losing out on the strategic US markets, state oil firm Nigerian National Petroleum Corporation (NNPC) said Thursday.
Exports of Nigeria’s major crude grade, Bonny Light, which at it peak produced around 1 million b/d, began declining rapidly from July 2014 to zero level by the end of last year following increased shale oil production by the US.
Speaking at an industry conference in the Nigerian capital Abuja, NNPC Group Managing Director Joseph Dawha said that while Nigeria repositioned the destination of its crude to Asia and Europe, it was still looking for more markets for the shipment of its 2 million b/d output.
“Strategic repositioning of the destination of Nigeria’s crude trade requires more than a change of destination but must include…longer-term crude sale contracts beyond the current one-year term,” Dawha said in a presentation.
Dawha said fellow African producer Angola had adopted the strategy with long-term crude contracts to Indonesia and India, adding that Nigeria would bank on its light sweet crude grade which had a competitive advantage in many of the new destination markets.
Nigeria awards contracts for the lifting of around 1.3 million b/d, the country’s share of the oil jointly produced with foreign partners, on a one-year term basis.
The most recent allocations were awarded mainly to indigenous companies and other African countries in June 2014 and will lapse in June this year.
While India and Europe have emerged as the largest markets for Nigerian crude, the OPEC member still struggles to dispose of its oil leading to a growing overhang of unsold Nigerian cargoes, compounding its economic woes already battered by lower oil prices in the international market.
To help get round this, The NNPC chief executive said Nigeria was also considering the direct sales of crude to overseas refineries in new markets, a strategy adopted by fellow OPEC members Saudi Arabia and Kuwait.
More Nigerian crude would also be available for the four domestic refineries when ongoing repairs were completed next year and capacity utilization rose to 90% of the plants’ combined nameplate capacity of 445,000 b/d, Dawha said.