Thursday 9 June 2016

Niger Delta Militants Attacks: Nigeria risks losing oil market to Iran; ...Foreign refineries to stop buying Nigeria’s crude oil

Following the incessant production outages and force majeure declared on exports of some grades of Nigerian crude oil, which have created supply uncertainty to the major buyers of Nigeria’s crude oil, mostly foreign refineries, the refineries from India to the United States are backing away from buying Nigerian oil and turning to Iran and other Middle East countries for sustainable crude oil supply.

The uncertainty about deliveries of Nigerian crude to the foreign buyers due to supply disruptions has heightened in recent months as the country squares up to the new militant group in the Niger Delta, the Niger Delta Avengers (NDA), which wednesday claimed it had struck Chevron-operated RMP 20 Well at Didi community in Egbema, Warri North Local Government area of Delta State.

Niger Delta Avengers, NDA, yesterday, scuttled the hope of early resolution of the current spate of bombings in the Niger Delta, as it did not only reject the window created for dialogue by the Federal Government, but also blew up another Chevron crude oil pipeline.

This came on a day indications emerged that Nigeria’s crude oil export may drop further in the days ahead, as major refineries across the globe have concluded plans to stop purchase of crude oil from Nigeria due to rising uncertainties about the country meeting up with deliveries.

Force majeure is a legal clause that allows crude oil producers to stop exports and cancel deliveries to customers without breaching contracts by citing unforeseen circumstances.

Shell, ExxonMobil and Nigerian Agip Oil Company (NAOC) have invoked this clause in recent weeks to avoid contractual obligations to customers who were denied supplies.

The lack of guarantee of steady supply of Nigerian crude by the IOCs has fuelled the reluctance of foreign buyers to buy Nigerian crude.

It is feared that with this development, the country may risk losing some of its customers to other rival producers, particularly Iran.

So far, crude oil supply shortfalls like those experienced in Nigeria and Libya, have been met by rising output in the Middle East, especially Iran, which has ramped up output since the end of international sanctions against the country in January.

Nigeria, which ranked as Africa’s top producer, recently lost its position to Angola after the country’s production dropped from 2.2 million barrels per day to less than 1.5 million barrels per day following production disruptions caused by the recent upsurge in militant attacks on oil and gas facilities.
The NDA has staged a number of attacks on oil installations belonging to Shell, ENI and Chevron, pushing output in Nigeria down past 20-year lows last month.

Though some oil facilities have clawed back output, the Avenger’s attacks have continued and the group has vowed to bring Nigerian production to “zero”.

Credit: ThisDay/Vanguard

No comments:

Post a Comment