Nearly seven months after the United States lifted the 40-year-old ban on the exports of its crude oil, producers in the country have made inroads into Europe, the largest regional importer of Nigerian oil.
The US crude exports rose to a record 662,000 barrels per day in May, the highest since 1920, from 591,000bpd in April, according to foreign trade data from the US Census Bureau.
Among the prominent destinations of the US crude oil in May were the Netherlands, Italy, the United Kingdom and Canada.
Canada, whose imports of Nigerian crude increased by 261 per cent in the first quarter of this year, accounted for the most US crude exports at 308,000bpd, followed by the Netherlands at 110,000bpd and Curacao at 67,000bpd.
The Netherlands, which imported about 32.1 million barrels of Nigerian crude in the first quarter of 2015, only bought a total of 7.8 million barrels in the same period this year, the latest data from the Nigerian National Petroleum Corporation showed on Friday.
The European country, which has been the third largest buyer of Nigerian crude until recently, imported as much as 12.9 million barrels in February last year, surpassing India and Spain that month.
Two other European buyers of the Nigerian crude, Britain and Italy, imported 36,000bpd and 23,000bpd, respectively from the US in May, according to the Census Bureau.
In 2013, Nigeria lost its biggest customer, the US, which has since then drastically reduced its imports of Nigerian crude, following the dramatic rise in domestic shale oil production.
The US Congress in December 2015 passed a legislation that lifted the 40-year-old ban on the exports of the country’s crude oil, allowing producers to sell crude to the already saturated international market.
The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, in a telephone interview with our correspondent, said, “The US producers are exporting more because they are looking for better prices, and there are better prices in Europe.
“But for Nigeria, that means we may have to give more discounts to be able to retain our market share in Europe because the competition is now tightening. We are competing with the US, which offers proximity, and, maybe to some extent, some relationships as well.
Oni recalled that in late May, some international refiners were worried about Nigerian crude because of force majeure on some of the nation’s crude oil export grades, following the resurgence of attacks on oil and gas facilities in the Niger Delta.
He said, “With the increase in the US oil exports, some of Nigeria’s cargoes may be displaced. What the US is exporting is also light sweet crude because shale in itself is light crude oil.
“It is unlikely we will see a lot of the US exports to Asia; we are likely to see more of the US exports to Europe in the short term. But over the long term, as more volumes are available, it is likely that we will start to see some the US exports to Asia.”
Reuters also reported that since the decades-long ban on the US oil exports was lifted, a number of merchants, traders, producers and even refiners had moved crude to Latin America, Europe, Asia and other locations.
Following the spate of production disruptions largely caused by the recent surge in militant attacks on oil infrastructure in the Niger Delta that have cut Nigeria’s output to the lowest in almost three decades, exports of the commodity from the country have taken a serious beating.
Force majeure – a legal clause that allows the exporters to stop shipments without breaching contracts – was declared on four of the nation’s five largest export streams – Forcados, Qua Iboe, Bonny Light and Brass River. All but that of Qua Iboe was as a result of militant attacks.
On Thursday, Shell lifted the force majeure on exports of Bonny Light, Nigeria’s reference crude oil grade, following the restoration of production into Bonny Terminal.
Two other crude oil grades – Forcados and Brass River – remain under force majeure.
Nigeria relies heavily on earning from oil exports, and the recent production disruptions came as an additional headache for an economy that already suffers from the sharp drop in oil prices since 2014.