Glut Looms as Buyers Reject Nigerian Crude

Crude Oil Prices Surge Towards $80 After OPEC+ Cancels Output Talks

LAGOS—Nigeria’s oil supply to the international market is facing glut as ample supply of light and medium grades from the North Sea and the Mediterranean are limiting buying interest for Nigerian crude, traders said. This is coming as Angola launches big oil block.

A picture taken on September 16, 2015 shows workers trying to tie a pipe of the first refinery in Nigeria, which was built in 1965 in oil rich Port Harcourt, Rivers State. The Port Harcourt refinery is Nigeria’s oldest, built in 1965, nine years after crude was first found under the marshy soil and creeks of the delta, where the Niger river meanders to the Gulf of Guinea. Refineries in nearby Warri and Kaduna in the north central region were built in the years that followed, while a new plant was added to the same site in Port Harcourt in 1989. In recent years, however, it became a byword for corruption, a murky, state-run body where billions of dollars in revenue apparently disappeared. AFP  PHOTO

A glut of Nigerian cargoes reckoned to be near 50 cargoes was said to be weighing on the market, traders said yesterday, while state Angolan oil firm, Sonangol, trimmed its offer of Saxi crude.

Much of the glut could end up heading into the refining systems of major oil companies like Shell and Total, a trader said, meaning the excess is effectively lower than 50 cargoes. Demand for Agbami and Qua Iboe has been higher than demand for other grades so far. while Qua Iboe was being offered at about dated Brent plus $2. About 10 April-loading Angolan cargoes remained available, steady from Tuesday’s estimate.

The CLOV grade has been relatively slow to find buyers. Sonangol trimmed its offer of Saxi crude to dated Brent plus 50 cents, down 25 cents from Tuesday’s level, a trader said. The company was still offering Dalia at dated Brent minus 70 cents a barrel.

Meanwhile, Angola is set to launch its big oil block. The first vessel that will pump and store oil for Angola’s 230,000 barrels per day (bpd) Kaombo project is en route to the West African nation, operator, Total, said. The Kaombo oil block will produce its first oil this summer. Once it is fully up and running, it will add roughly 14 per cent to the OPEC member nation’s average 2017 output of 1.632 million bpd. The Kaombo Norte floating production, storage and offloading (FPSO) vessel left Singapore earlier this week. The vessel has a capacity to pump 115,000 bpd, half the oil block’s eventual production. The second FPSO, Kaombo Sul, is still in Singapore. The $16 billion offshore project will add a significant amount of oil to Africa’s number two exporter at a time when the nation is bound by output limits under a deal orchestrated by the Organization of the Petroleum Exporting Countries.

Source: Vanguard

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