Despite the seeming resolution of the conflict between the Federal Government and oil marketers over the petroleum subsidy claims payment, data, yesterday, showed that Nigeria’s fuel import has remained low due to oil marketers’ apathy.
This came as Nigeria’s crude oil export received a boost, as a Canadian crude oil refining company, Come By Chance Refinery has purchased one million barrels of Nigeria’s Qua Iboe crude grade.
Oil trading sources, according to a report obtained from a global provider of energy and metals information and a source of benchmark price assessments in the physical energy markets, disclosed that imports into Nigeria, about one million metric tonnes (mt)/month making it the region’s largest importer of gasoline, continued at a trickle, due to little guidance from the government.
The sources stated that importers and distribution companies were seeking more solid assurances over the payment of the outstanding subsidy, adding that the refusal of the oil marketers to resume import is a signal that the deal between them and the Federal Government had failed to restore confidence.
The report stated that arbitrage from Northwest Europe to West Africa has acquired increasing importance in recent months, as structurally shrinking arbitrage opportunities to the US Atlantic Coast and the Persian Gulf have limited outlets for Europe’s net-long gasoline market.
A European trading source disclosed that trading of Northwest European gasoline cargoes to West Africa had been quiet, adding that nothing has been done recently.
Meanwhile, data obtained from Reuters showed that Come By Chance’s crude oil purchase, the first in at least a decade, arrived the refinery aboard a Bahamas-flagged ship named M.V. Jiaolong Spirit.
The purchases, the report stated, come as West African crude producers are courting new suitors in the face of weak demand from a U.S. market awash with cheaper, domestic crude.
According to the report, the search for new buyers has forced West African producers to compete aggressively on price, so light sweet Nigerian crude grades like Qua Iboe are being heavily discounted relative to global benchmark Brent crude.
Commenting on the development, Sara Emerson, a Managing Principal at ESAI Energy said, “I suspect the West African crude is priced to sell given the continuing reduction in U.S. imports of light sweet African crude.”
Another source familiar with the refinery’s operations stated that the crude’s relatively cheap price has drawn interest from the 115,000 barrel-per-day Come By Chance refinery, adding that the refinery has made one additional purchase of Nigerian crude.
The report said Nigerian deliveries are the latest sign of a new approach to crude supply by the recent owners of Come By Chance, a team of veteran oil traders including Neal Shear, former commodities banker at Morgan Stanley and ex-Lehman Brothers executive Kaushik Amin, who purchased the refinery in November.