How Russia-Ukraine crisis affects inflow of Nigeria’s crude into international markets –NNPCL

*The Nigerian National Petroleum Company Limited discloses though ongoing conflict between Russia and Ukraine has affected oil inflows of the country’s grades into the international markets, it has secured vital partnerships with notable financial institutions to advance upstream investments to restore and sustainably grow crude production capacity

Gbenga Kayode | ConsumerConnect

The Nigerian National Petroleum Company Limited (NNPC Limited) has provided insight into how the lingering conflict between Russia and Ukraine has impacted Nigerian crude oil inflows in the international oil market.

The NNPC Limited, which noted this development in a statement Mr. Femi Soneye, Chief Corporate Communications Officer at NNPC Limited, Wednesday, November 8, 2023, had resulted in a dip in demand from the once-dependable Asian market at the onset of hostilities in the Eastern bloc.

The national oil company stated Maryamu Idris, Executive Director, Crude and Condensate at NNPC Trading Limited, said in a panel presentation at the Argus European Crude Conference in London, that in addition to the substantial price shocks impacting commodity and energy prices globally, the conflict between Russia and Ukraine had triggered a situation where India, a primary destination for Nigerian grades, increased its appetite for discounted Russian barrels to the detriment of some Nigerian volumes.

Idris 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.”

The company’s Executive Director of Crude and Condensate equally observed that the Nigerian crude flow to Europe had increased in a bid to fill supply gaps left by the ban on Russian crude.

She further stated that six months before the war 2022, 678,000 bpd of Nigerian crude grades were shipped to Europe, compared to 710,000 bpd six months later and 730,000 bpd so far this year.

Idris explained: “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.”

She noted: “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.”

Crude production challenges in Nigeria

In terms of production challenges in the downstream sector of the Nigerian oil industry, Idris also remarked that, like many other oil-producing countries, the West African country also, had faced production challenges aggravated by the damaging Coronavirus (COVID-19) pandemic.

According to her, such negative implications included reduced investment in the upstream sector, supply chain disruptions impacting upstream operations, ageing oil fields, and oil theft by unscrupulous elements. These factors, she said, contributed to production declines in the second half of 2022 and early 2023.

The Executive Director, however, noted that the challenges are fast becoming a thing of the past with the introduction and implementation of a new framework for the domestic petroleum industry (the PIA of 2021).

She stressed the Act has rejuvenated the business landscape, and re-positioned the NNPC Limited to adopt a more commercial approach to the management of the country’s hydrocarbon resources.

Partnerships with notable financial institutions

The NNPC Limited, in the statement, also said it had secured vital partnerships with notable financial institutions to promote upstream investments to restore and sustainably grow production capacity in the coming years.

“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,” Idris stated.

The Executive Director of Crude and Condensate at NNPC Trading Limited said: “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.”

Idris as well affirmed besides sustainably growing upstream production volumes, NNPC Limited is also 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.

The vehicle for this, she explained, is the restructured NNPC Trading Company, focused on growing NNPC’s presence in the global market for crude, condensate, gas, and petroleum products.

The Argus Crude European Crude Conference Panel Session was held with the theme, “The Invisible Hand: How Are Shareholders and Asset Managers Meeting the Crude Industry? What Does This Mean for the Future of Crude in Europe?”.

Vice-President Crude of Argus, James Gooder, moderated the event, said the statement.