Refiners shun Nigerian crude over militancy

Refiners abroad may have shunned Nigeria’s sweet crudes due to militancy and incessant attacks on oil installations in the Niger Delta region.

Nigerian militant group, the Niger Delta Avengers, have said last Friday that it would not permit foreign oil companies operating in the Niger Delta region to carry out repairs on bombed oil pipelines, threatening more devastating attacks on any repaired facility.

“There is no guarantee the Nigerian crudes will load and set sail safely. It’s very risky,” said a Singapore-based sweet crude trader.

Moreover, a number of Indian state-owned refiners, reportedly, have been actively picking up Malaysian oil cargoes for loading in July and August amid growing uncertainty over the exports of Nigeria’s crude grades, according to regional sweet crude traders.

Bharat Petroleum Corporation Limited on Monday issued a spot tender to purchase several Malaysian light sweet crude grades, raising expectations that more Indian end-users could switch their focus to Southeast Asian supplies, Platts reported.

BPCL was said to be seeking up to one million barrels of various Southeast Asian light sweet crudes, including Malaysia’s Miri Light, Labuan, Tapis, Kikeh, Kimanis and Bintulu as well as Brunei’s Seria Light and Champion crudes for loading over September 11-20, according to an official tender notice seen by S&P Global Platts.

According to the latest shipping fixtures seen by Platts, India Oil Corporation fixed Olympic Sky and Seafalcon to move a total of about 1.2 million barrels of Malaysian Labuan crude for loading in July, while BPCL fixed Nordic Jupiter, Mare Siculum, Shah Deniz and Pavino Spirit to move around one million barrels each of light sweet Kikeh and Kimanis crudes for loading in July.

The tender closes today, July 22, with validity until July 26. The latest spot tender raised a few eyebrows in the Asia-Pacific sweet crude market, as the Indian state-owned company does not regularly seek Malaysian and Bruneian crude grades in the spot market.

However, BPCL’s latest move was seen as necessary, as the procurement of any Nigerian crude grades would be a big risk amid ongoing production hiccups caused by militant attacks in the Niger Delta, a company source said Tuesday.

“BPCL, like many other Indian state-run companies, prefers to take Nigerian light sweet crudes like Qua Iboe and Bonny Light. Those are the number one choices,” the source said, adding that “when production (of light sweet Nigerian grades is) in doubt, the next best option would be Malaysian (grades).”

Late last week, Mobil Producing Nigeria, a subsidiary of ExxonMobil, said Nigerian crude grade, Qua Iboe, had been placed under force majeure and exports were halted, while Italian company Eni confirmed earlier this month that 4,000 barrels per day of oil equivalent of equity production had been shut in following an attack claimed by Nigerian militants in the Niger Delta.

Furthermore, Nigeria’s crude oil output fell to a 10-year record low of 800,000 bopd recently when the Niger Delta Avengers sustained continuous attacks in oil wells and pipelines across the region.

Discreetly, it was revealed that the Nigerian government holding a meeting with the militants to end the attacks amidst economic hardship.