Changing trends in global crude oil demand are creating rising uncertainty for Nigeria, as appeal for its product – ‘Bonny light’ continues to wane, with a growing focus on ‘heavy crude’ which is produced by countries including Saudi Arabia, Mexico and Angola.
Experts consequently say that for Nigeria to optimally sustain its economy under prevailing circumstances, it must come up with creative ways to deploy its crude.
They suggest that Nigeria should begin to refine more of her crude locally and then export for optimum returns, and also veer more into extracting by-products such as petro-chemicals, fertiliser and ethanol among others, from it to boost the economy.
Heavy crude is capable of yielding higher volumes of derivatives such as Automotive Gas oil (otherwise known as diesel), as well as Naphtha, than is the case with Nigeria’s ‘Bonny light’, which was until recently preferred by most refiners.
Participants at the Lagos Oil Forum organised by platts Mcgraw Hill Financial, which specialises in analysing global crude oil market trends, at the weekend, said unless the country devices ingenious ways of using its crude oil locally, it would continue to have a tough time selling in the global market.
They added that this would cut deep, considering that the country depends on oil alone for over 90 percent of its foreign exchange earnings.
Eklavya Gupte, a senior editor with Platts, who spoke on the current state of West Africa’s crude oil market, said refineries across the globe can now process heavy crude because of new technologies and that this has prompted many refinery operators across the world to look away from Nigeria and its ‘Bonny light’.
Gupte said a country like Angola for instance, has heavy crude, which is also sweet and because of this, the United States of America now buys more of Angolan crude than Nigerian.
According to him , India is now the biggest buyer of Nigerian crude, about 20 per cent, because it has large refining capacity, on account of its huge population.
He further observed that if India decides to reduce its demand, it would pose a significant crisis for Nigeria, as things stand.
Also speaking at the forum, Andrew Bonnington, editorial director of Platts, said that Nigeria needs to find new buyers of her crude.
Bonnington said Nigeria is benefitting from the crisis in Libya because the traditional buyers of that country’s crude have now turned to Nigeria in the interim.
“The refineries in the Mediterranean have turned to Nigeria for crude oil supply”, he said.
The other challenge Nigerian crude is having, is the cost of freight. Many of her customers now, would prefer to buy from locations which are closer to them, so as to cut down on the cost of freight.
Falling refining capacities across the world are also an issue the country would have to contend with, it was said.
Olusola Bello
