Indian buyers shun Nigeria’s crude oil cargoes

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Some cargoes of Nigeria’s largest crude oil stream, Qua Iboe, planned to be exported in April and May, are struggling to find buyers, even as the June export programme is expected to start emerging this week.

Trading sources said buyers from India, which is the single largest importer of Nigeria’s crude oil, were choosing other West African crude grades over Qua Iboe, according to Platts, a United States-based publication that provides information on energy and metals data.

“Indian Oil Corporation Limited sidestepped Qua in the last two tenders,” one West African crude trader was quoted as saying.

Other traders also noted the lack of Qua Iboe cargoes being bought by the usual Indian refineries, Bharat Petroleum Corporation Limited, Hindustan Petroleum Corporation Limited and Mangalore Refinery and Petrochemicals Limited, as well as Indonesia’s Pertamina, during their May tenders.

The tenders instead took similar grade Bonny Light, or other West African crude grades such as Nigeria’s Agbami, or Angola’s Pazflor and Kissanje grades.

Out of the 11 May Qua Iboe cargoes, five currently remain unsold, said trading sources. On top of that, there are also two April cargoes available, with the June programme expected in the next few days.

As it is late in the trading cycle for the remaining cargoes to go to Asian refineries, traders said they expected the barrels to head to Europe, where they will face stiff competition from local grades in the North Sea and in the Mediterranean.

So far in May, despite slow demand, most Nigerian grades have seen steady prices due to a tightened market as a result of the Forcados grade in force majeure, and Erha grade not having a published May programme. But in order to attract European buyers, Qua’s differentials to Dated Brent will have to drop, said several traders.

“Really truly, it’s not great right now; freight is expensive, there is no contango in the market and (Qua) is competing into Europe with Med grades; and all the (May) tenders are over now,” said a second West African crude trader.

Platts assessed Qua Iboe on Monday at Dated Brent plus 65 cents per barrel, with the grade dropping 10 cents per barrel from its assessment the previous week.

Exports of Qua Iboe are expected to rise to 317,000 barrels per day in June, Reuters quoted traders to have said on Tuesday, above the revised 306,000 bpd for May.

Nigeria was said to have lowered its official selling price for Bonny Light for May to two cents per barrel and for Qua Iboe to 39 cents per barrel.

About 20 May loading cargoes remained available, as some traders re-offered previously sold cargoes. Grades available included Escravos, Bonny Light and Qua Iboe.

Shell had on February 21 declared force majeure on Forcados oil exports, following disruption in production caused by the spill on the subsea crude export pipeline.

The Forcados terminal is one of Nigeria’s biggest terminals with capacity to export 400,000 barrels per day.

Repair work on the pipeline feeding Forcados crude oil to the export terminal would last until June, sources familiar with the matter said.

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