Timipre Silva, the minister of state, petroleum resources, on Wednesday said the federal government will comply with the rules of the Organisation of Petroleum Exporting Countries (OPEC).
“It is not every day,” he said when asked about current overproduction. “We are team players. We will do what OPEC asks,” he told Reuters.
Meanwhile, Californian refineries began loading up on Nigerian oil – taking cargoes of Qua Iboe, Bonga, Erha, Forcados and others, according to traders and Refinitiv Eikon data.
Marathon Oil at its Long Beach refinery has been the most consistent buyer, with another very large crude carrier (VLCC) full of Forcados oil departing Nigeria on Thursday.
Traders said a combination of market factors – including the difficulty and expense of getting U.S. crude oil to the West Coast – made Nigerian grades attractive.
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“It makes more cost sense. Even if U.S. crude is closer on the map, when you factor in the price and availability of taking in barrels from Louisiana or Nigeria, Nigeria came out cheaper,” one seller of West African oil said.
The purchases are a rare glimmer of hope this year for Nigerian oil, which now competes with U.S. shale for buyers, including in its top outlet, India.
The United States had historically been a heavy importer of crude oil, but shale production, coupled with the lifting of a four-decade export ban, transformed it into a net exporter of oil and fuels by late last year.
Barrels from this U.S. oil bonanza sailing to domestic shores face added costs, however, due to a century-old law called the Jones Act, which mandates that only U.S.-flagged vessels can transport it.
The restriction often makes freight within the United States more costly than much longer journeys.
But traders warn the surprise opening of the West Africa-West Coast export window, or arb, could be short-lived due to the timescales and distance involved.
“The arb may be already shutting. The price factors which made a cargo exporting today look like a good deal would have been happening over a month ago when the deal was made,” a major buyer of West African oil said.
“They won’t be the same today and certainly won’t be the same over a month from now when the cargo arrives.”
Frontpage August 7, 2019
Frontpage September 8, 2018