Nigeria Looks For Buyers As China Ignores Crude

Nigeria has a lot to do to woo buyers following the decision of China
to ignore crude from Nigeria. This is happening at a time when the
country has become the biggest casualty of the rising United States
shale oil production.

China is the second largest consumer of crude oil, and when it does
not figure at all as one of your regular buyers, you know you have a
problem. And Nigerian crude is suffering because of this. China likes
crude oil that is heavy and sweet, as it fits the appetite of its
refineries that produce a lot of fuel oil to keep its industrial and
manufacturing economy running, according to a data from the US Energy
Information Administration, EIA.

The EIA noted that China also has a lot of complex and sophisticated
refineries that can still produce middle distillates by distilling
heavy crude oil, making the refiners much better margins.

Consequently, China ignores Nigerian crude for now, as their demand
for light sweet crude oil is very sparse. It is high time Nigeria
found a way to attract its crude oil to China, it noted.

Crude exports

In 2014, about 45 percent of Nigerian crude exports went to Europe,
according to the EIA data. But the issue for Nigeria is that it is so
dependent on a region where crude demand is stagnant as a lot of
economies are still stumbling and it needs to find demand in countries
that are growing, particularly in Asia.

Nigeria's condition is made worse by the fact that it has become the
biggest casualty of rising United States shale oil production

Until about seven years ago, the US, which remains the largest oil
consumer in the world, used to buy more than 1 million barrels per day
of light sweet Nigerian crude oil, which was almost 50 percent of
Nigerian oil exports at the time. In 2014, only three percent of
Nigerian exports went to the US, according to the same data published
by the US EIA.

Nigeria lost its biggest buyer, and the reason has been attributed to
the dramatic rise in US shale oil production.

US shale oil is said to be extremely similar in quality to light sweet
Nigerian crude oil, and as more and more shale basins were discovered
in its own backyard, the US did not need any more oil from Nigeria.

Last year, there were six weeks in a row starting from early July
during which the US did not import a single barrel of crude oil. This
was the first time that the US had not imported any Nigerian crude oil
for such a length of a time, since US EIA started compiling this data
almost four decades ago.

The shale revolution has had a profound impact on the makeup of the US
import market, which has, by extension, greatly altered the direction
of crude flows both within Europe and to Asia. And Nigeria has been
the biggest casualty of this, it noted.

However, India has the largest buyer of Nigerian crude, which has been
one of the positives for the West African country in the last few
years. But demand from India for Nigerian crudes is slightly on the
wane as its demand for Latin American crudes is growing sharply.

India is also the largest buyer of Venezuelan crudes, and with
refineries getting more and more complex in the sub-continent, their
demand for light sweet crudes is expected to tail off.

The world's largest refinery complex situated in Jamnagar in the
western state of Gujarat in India, operated by Reliance, runs
primarily on heavy crudes, dominated largely by crudes from the Middle
East and Latin America.