The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said Nigeria has forever lost the United States as a significant crude export market.
“That’s gone,” Kachikwu was quoted by Platts to have said during a news conference at CERAWeek in Houston, Texas, United States.
Light sweet Nigerian crude is very similar to the light oil produced in US shale. As US shale production has grown, the appetite for Nigerian crude in the US has dropped dramatically.
US imports of Nigerian crude climbed as high as 1.31 million barrels per day in February 2006, according to the US Energy Information Administration. But as the shale revolution began and output of light tight oil rose, Nigerian imports fell. In July and August of 2014 and June of 2015 the US did not import any Nigerian oil.
US imports of Nigerian crude averaged 296,000 bpd in December last year, according to EIA data, the highest monthly import level since 2011. But Kachikwu called any significant increase in Nigerian shipments to the US “very unlikely.”
Nigeria’s oil output averaged 1.93 million bpd in January, up 30,000 bpd from December, according to the latest S&P Global Platts survey.
Reuters quoted Kachikwu as saying that oil majors operating in both shale fields and in members of the Organisation of Petroleum Exporting Countries should bear some responsibility for prices.
“We need to begin to look at companies that are very active in these areas and begin to get them to take some responsibilities in terms of stability of oil prices,” Kachikwu told Reuters on the sidelines of the conference, though he did not name any specific companies.
“Some of the same companies that are working in shale are the same companies working in OPEC (member countries),” he added.
The price of oil rose steadily throughout 2017 in the wake an agreement between OPEC and non-members, including Russia, to cut production by 1.8 million bpd beginning last year.
That surge in prices, however, boosted US production sharply, which hit a record in November 2017 at more than 10 million bpd and is expected to surpass 11 million bpd later this year.
Kachikwu said that the rapid growth in shale supply is “not just a problem for OPEC, it’s a problem for the entire oil industry.”
“I don’t think it requires pressure. I think the oil companies would be the first to tell you that stability in the oil price is important to them,” he added.