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The US, world’s largest oil consumer, is on track to leapfrog Nigeria, Angola, Norway and Venezuela at the end of 2018 to become one of the top 10 global oil exporters.
Analysts say Nigeria’s earnings from crude can be threatened as USA may pump up to 2.8 million barrel per day (mbpd) to international market as shale production soars and restrictions on exports are lifted.
Nigeria pumps some 2mbpd by comparison. US crude is of the same quality with Nigeria’s (light and sweet) and has wider access to the market than Nigeria’s.
Stakeholders say that should the jump in crude exports from the US materialises it means the price of the commodity may fall just as some of the traditional markets that Nigeria exports crude to could also be captured by the American shale producers.
Consequently, the Nigerian federal budget, which depends on oil revenues to fund up to 60 percent of outlays, may be in disarray as foreign exchange earnings will dwindle.
Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), says this is another wake-up call for the country, saying, “We cannot continue to depend on crude oil and need to quickly reduce or eliminate it as a major source of revenue or foreign exchange earnings.”
He suggests that Nigeria’s policy and institutions must change, adding that the government should create enabling environment for quick diversification of the economy.
Reacting to this development, Taofik Adegbite, CEO of Marine Platform, says the petroleum industry is now at the last bubble, which could lead to the final burst, saying by 2025 global crude prices could see the final burst when crude may be in the region of $14 or $15 per barrel due to glut.
Traders say rising exports from the United States is edging out Nigerian oil, particularly as grades including Forcados experienced loading delays.
Crude oil exports in the first half of 2017 from the US increased by more than 300,000 barrels per day (b/d) from the first half of 2016, reaching a record high of 0.9 million b/d.
Petroleum product exports also grew over the same period with propane and distillate exports reaching record highs of 0.9 million b/d and 1.3 million b/d, respectively.
Following the removal of restrictions on exporting US crude oil in December 2015, total volumes of crude oil exports and the number of destinations for those exports both increased.
The US exported crude oil to 27 countries in the first half of 2017 compared with 19 countries in the first half of 2016.
OLUSOLA BELLO
