Angola Beats Nigeria as Largest Crude Exporter
Amidst shrinking exports, production capacity issues in Nigeria have lifted Angola to become the largest crude exporter in Africa, according to Armen Azizian, a crude analyst at Vortexa note.
Angola’s crude exports averaged 1.1 million barrels per day (mbpd) in the third quarter of 2022, 80kbd higher than Nigeria over the same period. The development builds amidst the redirection of West African crude flows to Europe from Asia.
In September, West African crude exports totalled 2.9 million barrels per day (mbpd) in, edging lower from August but an uptick from record lows of 2.75 mbpd in July.
Vortexa analyst said this slowdown in West African crude exports, which were 175kbd below the 12-month average, was driven largely by Nigeria’s declining export capacity and crude production.
The report noted that the share of West African crude exports to Asia declined by 9 percentage points between January to September 2022, compared to the same period in 2021, sitting at 40% in September.
The volumes instead diverted to Europe, as European refiners replaced lost the Russian Urals and consequently turned to other Atlantic Basin crudes, including sweeter West African grades – which would have the knock benefit of relatively lower refining costs.
Nigerian crude exports decline, onshore crude stocks build
Nigerian crude exports totalled 1.1mbpd in September 2022, close to a very weak Q3 2022 average of around 1mbpd. This decline was driven by shutdowns at Nigeria’s Forcados and Brass terminals due to repairs – the former responsible for exporting Nigeria’s largest crude stream.
Also, the Trans-Niger pipeline, which transports 180kbd of crude to the Bonny Export Terminal, has ceased operations due to crude theft, according to Bloomberg.
In addition, lower Nigerian crude production was attributed to structural underinvestment, coupled with crude theft. Production declined to 1.1mbpd in August according to OPEC, a 25% decline from 6 months earlier.
“As Nigeria’s exports have declined, we also see a rise in Nigeria’s onshore crude inventories – up by nearly 3mb since August 2022 to a two-year high of 10.5mb -as of 1 October 2022”, Vortexa analyst said.
As an alternative to Forcados, Nigeria has focused on exports of other key sweet, middle distillate rich grades including Egina, Escravos and Qua Iboe. These grades accounted for 380kbd of Nigeria’s crude exports in September, remaining flat month-on-month.
Angola overtook Nigeria
Angola’s crude exports averaged 1.1mbpd in the third quarter of2022, 80kbd higher than Nigeria over the same period. Whereas Angola’s crude exports to China declined 300kbd in September m-o-m, its crude exports to Europe increased 100kbd in September m-o-m, sitting at six-year highs.
Nigeria’s declining export capacity and reduced crude production coupled with increased European demand for (sweet) West African grades have resulted in Angola taking the top spot as West Africa’s largest crude exporter in Q3 2022.
The redirection of Angolan crude to Europe is partly a by-product of weaker demand from China and the shift by European refiners looking for alternatives to the Russian Urals. READ: Crude Oil Prices Edge Higher as Nigerian Grades Firm
Additionally, heightened European demand for sweet grades due to higher natural gas prices is incentivising European refiners to cut costs, supporting higher exports to Europe of Angolan grades such as Cabinda, Clov and Pazflor.
Vortexa’s analyst said the main destinations for Angolan crude in Europe are Netherlands, Italy and France. However, Angolan grades are facing price pressure as they compete increasingly with light sweet crude from Libya and falling (but still high) US crude.
This is reflected in their declining premiums to North Sea Dated, according to Argus Media – Cabinda and Pazflor were assessed at $1.55/bl and $1.61/bl as of 30 September 2022, respectively, down from $3.75/bl and $3.43/bl on 30 August 2022, respectively.
Looking ahead, total West African crude exports will remain capped as Nigerian exports continue to contend with export and production issues. As a region, West Africa will have to remain competitive for high volumes to continue flowing to Europe.
European refiners have been largely successful in their efforts to find alternatives to the Russian Urals and could pivot marginal supply to other Atlantic Basin producers or even the Middle East.
Should large Chinese product quotas for the fourth quarter of 2022 and first quarter of 2023 materialise, that could also intensify competition for West Africa crude.
# Angola Beats Nigeria as Largest Crude Exporter in West Africa#