The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Andrew Yakubu, has said China had become the alternative market for Nigeria’s crude oil, following dwindling imports by the United States, which was the major buyer of Nigeria’s crude oil.
Speaking at the sidelines of a recent oil and gas conference in Lagos, Yakubu stated that China was a very good market for any shortfall in the United States’ imports.
“The decision of the United States is not driven by the fact that they don’t want to buy our oil; they have other issues. The Shale gas has been discovered and it is a major source of energy. But of course, the good news is that there are other parts of the world that are interested. As you know, major demand growth is going to come from China and the east. So, that is a very good replacement of whatever shortfall we have with the United States,” he said.
Nigeria’s crude oil export to the United States, which was over one million barrels per day (bpd) in December 2009, had declined to 352,000bpd, representing a loss of about 70 per cent of the United States’ market.
Statistics indicate that Nigeria was the third-largest supplier of crude oil to the United States in 2010, with the US accounting for 43per cent of Nigeria’s exports.
In September 2011, Nigeria’s crude export to the United States dropped to 580,000bpd, with the country assuming the sixth position, after Canada, Saudi Arabia, Mexico, Venezuela and Russia.
Nigeria’s crude export to the United States further dwindled to 352,000bpd as at February 2012.
Though refiners in Asia are said to be increasing crude oil imports, it is more difficult to ship crude oil from Nigeria to Asian countries than to the United States because of the long distances.
For instance, the distance from the Shell’s Bonny Export terminal in Rivers State, to Tianjin, China, is 12,172 miles, compared with 5,847 miles to New York Harbour in the United States.
With these long distances, Asian refiners are said to be demanding for discount to buy Nigeria’s crude.
Refiners that use Nigeria crude oil are also closing plants on the United States East Coast, the main destination for Nigerian exports, amid falling returns on investment.
Recent reports indicate that Sunoco stopped production at the 194,000-barrel per day Marcus Hook plant in Pennsylvania on December 2011.
ConocoPhillips stopped its 190,000-barrel per day Trainer, plant site on September 30, 2011 and the two facilities together accounted for half of East Coast crude oil processing capacity.
In recent years, China has demonstrated increasing appetite for Nigeria’s oil and gas resources.
Chinese National Offshore Oil Corporation (CNOOC), one of China’s largest state-run oil and gas producers, had agreed to buy a 45per cent stake in the license covering the Oil Mining Lease (OML) 130 field, which is owned by South Atlantic Petroleum.
CNOOC has been scouting for overseas oil and gas assets to supply China’s growing domestic market, as the country’s appetite for oil and gas is said to be second only to that of the United States.
CNOOC Chairman and Chief Executive, Mr. Fu Chengyu, had stated that the purchase would give CNOOC access to “an oil and gas field of huge interest and upside potential, located in one of the world’s largest oil and gas basins”.