Industry experts have said that the slash in the prices of the country’s crude oil grades, Qua Iboe and Bonny Light, by the Nigerian National Petroleum Corporation may prompt other oil exporters to cut their crude prices in a move to attract buyers.
The experts stated that Nigeria must be strategic in its approach to pricing of its crude relative to competing crudes.
Nigerian crude that usually sells a month ahead of delivery is said to be presently stored on ships and storage terminals without buyers. Across the world, Nigeria’s barrels have had hitch competing with cheaper products from the Middle East.
Other crude grades from South and Central America are equally entering the Asian market and displacing Nigerian crude cargo due to it cheaper rate and the Asian refineries are able to process any kind of crude.
India, which of late replaced the United States as the single biggest importer of crude oil from Nigeria, has reduced its import of Nigerian crude as its demand for Latin American crude is rising sharply.
According to Reuters, in a bid to attract buyers, the NNPC reduced the official selling price for its largest crude oil stream, Qua Iboe, to dated Brent plus 35 cents per barrel, the lowest differential since May 2005.
Bonny Light fell to dated Brent plus 23 cents. That the smallest differential since 2005 and compared with a 50 cent premium in June and $2.55 a year earlier, data compiled by Bloomberg show.
Mr. Ohi Alegbe, Group General Manager, Public Affairs Division, NNPC, disclosed that “It is not a slash in price; it is an alignment of 30 cents across board. There is market volatility and you want to sell what you have.”
The Chairman and Chief Executive Officer, International Energy Services Limited, Dr. Diran Fawibe, said, “Nigeria has to sell its crude oil to willing buyers with secondary consideration to traditional differentials.”
Fawibe, who was the general marketing manager for marketing Nigerian crude oil in the world market at the NNPC, also stated that, “Given the discounts being granted by Gulf producers, Nigeria must be strategic in its approach to pricing of its crude relative to competing crudes.”