Asia uses half the world’s oil and has become a hotspot for a price war among producers who are offering steep discounts to lock in buyers in the face of bulging global supplies, slowing demand and crumbling prices.
India,one of the world’s biggest consumers of oil, is Nigeria’s major crude oil export destination with earnings of $2.02 billion representing 17.5 per cent of the country’s total export for the third quarter of this year, the National Bureau of Statistics (NBS) said.
According to the Indian High Commission, for the 2014-15 financial year, the country imported $13.53 billion worth of crude and petroleum products whilein 2013-14, it was $13.96 billion.
Indian refiners have proved particularly enthusiastic buyers of Nigeria and other West African countriescrude both via tenders and some spot purchases.The country’s appetite for the West African (WAF) crude has surged in recent months as the country looks to shift its focus away from the Middle East.
Indian state-owned refiners like Indian Oil Corp, Bharat Petroleum Corp Limited and Hindustan Petroleum Corp Limited, and private refiner, Reliance, are all key and consistent buyers of Nigerian crudes like Qua Iboe, Bonny Light, EA Blend, Erha, Usan and Agbami. However, Nigeria’s oil sales may be threatened in 2016.The battle is only going to intensify with the return of Iranian barrels from the second half of 2016.
Iraq in $1.4 billion India oil deal
Iraq has signed deals worth $1.4 billion to ship about 160,000 barrels per day of crude to two Indian refiners in 2016, upping the ante in a race among exporters to cement their market share in Asia, the world’s top oil consuming region.
The recent deals by Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), reinforce its status as the number 3 supplier to Asia and mark a win for the conflict-plagued nation that has made big efforts to boost oil output and generate much-needed revenues.
The deals also highlight India’s rising importance as an oil customer. Iran, too, is looking to woo refiners in the South Asian country to drive crude sales.
India is “of strategic importance of course (as) it will remain the world’s fastest growing economy in 2016,” said VirendraChauhan, oil analyst at Energy Aspects in Singapore.
Iraq’s State Oil Marketing Organization (SOMO) signed a deal with India’s top private refiner Reliance Industries to supply about 100,000 barrels per day (bpd) of Basra Heavy in 2016.
SOMO also signed a term deal with Indian Oil Corp to export about 60,000 bpd of Basra Heavy, likely meant for IOC’s new Paradip refinery. The two firms already have a contract for Basra Light.
Given the agreements to come within six months of the launch of the Basra Heavy grade, it is evident Iraq is rushing to corner its share of the Asian market before more Iranian barrels enter the fray after an end to western sanctions.
Indian oil demand has almost doubled over the past 15 years to more than 4 million bpd and consumption will continue rising as the economy grows at more than 7 percent a year. The country meets about 80 percent of its oil needs through imports and is one of Iraq’s biggest customers.
Iraq’s exports to India soared by a third to over 600,000 bpd in the first 11 months this year, almost at par with sales to its top buyer China. The new Basra Heavy deals will convert some of this volume into fixed supplies, ensuring steady Iraqi oil flows to India next year.
South Korea to diversify oil Supply with US, Iran crude
Iran is expected to add around 500,000 bpd of crude supplies next year once sanctions are lifted. Iranian officials have already met refiners in India to seek proposals on how to make their supplies more competitive.
South Korea is eager to increase the diversity of its oil suppliers by looking at US and Iranian supplies as more exports from those countries become available, the South Korean Ministry of Trade, Industry and Energy said.The country welcomed the recent repeal of the 40-year-old crude export ban in the United States and the scheduled lifting of sanctions in Iran, the ministry statement said.
“If the sanctions on Iran are lifted, refiners expect to hike their Iranian crude imports to the level seen before the sanctions were imposed,” the statement said. Refiners hope to import U.S. condensate as supply of the light oil in Asia is now tight, it added.
South Korean refiners will look at importing supplies of US condensate should US benchmark West Texas Intermediate price drop to a discount of between $4-$6 a barrel to Middle East benchmark Dubai, the statement said, citing the refineries.
South Korea’s crude oil shipments from Iran fell nearly 30 percent in November from a year ago, with imports in the first eleven months of 2015 falling 0.8 percent and meeting sanction requirements over Tehran’s nuclear programme.
South Korea is the world’s fifth-largest crude importer and one of the major buyers of Iranian oil.
