More cargoes risk deferment
Glut, last weekend, rocked crude oil from Nigeria as 25 cargo-loads of the commodity in June loading programme scampered for buyers.
This came just as Bonny Light, one of the major grades from the country, remained under force majeure while a pipeline, which exports Forcados was still shut down.
Despite this new round of disruption to Nigerian crude exports, about 25 cargoes of June-loading Nigerian crude schedule sighted, were still available at the global market looking for buyers.
Nigeria’s largest stream, Qua Iboe, is, according to July loading programmes, which has also started to appear last week, exporting nine cargoes, two cargoes more than the exports in June. This has also subjected the West African crude differentials to pressures last weekend.
In all, between 20 and 25 cargoes of June-loading Nigerian crude were yet to get buyers – they are still available, the schedule showed. The respite, according to traders, is that some would find their way into major oil companies’ refining systems, while others might be deferred.
Supplies of two major Nigerian streams were disrupted last week. Bonny Light is under force majeure and a pipeline, which exports Forcados was shut
“Nonetheless, competition from other grades is keeping a lid on differentials,” some traders were quoted to have said.
For tenders, Indonesia’s Pertamina, a Reuters report showed, is running a tender to buy crude for August 1-10 or 16-20 or early September delivery. The tender closed on Monday. India’s HPCL is running a tender to buy six million barrels of crude for delivery on July 1-15 or August 1-10. The tender closes on May 23.
Shell, Nigeria’s biggest international oil company (IOC) in terms of asset and production, had last Thursday halted crude exports on a 97 kilometre, 150,000 barrels of oil per day Nembe Creek Trunk Line (NCTL) as it declared force majeure on Bonny Light crude exports, one of the major crude grades from Nigeria.
Cargoes of oil from the Bonny Light stream, for which exports are expected to reach around 195,000 barrels per day in June, had already been delayed by a few days up to about a week.
The force majeure, a contractual term on unforeseeable circumstances that prevent someone from fulfilling a contract, helped last Thursday to buoy the price surge to $80 per barrel, the highest level it had reached since November 2014.
A leak on the 240,000 barrels per day capacity Trans-Forcados pipeline that shut down earlier last week, also effectively cut down deliveries of Forcados, the country’s largest crude grade.
The shutdown of the Nembe Creek Trunk Line (NCTL) by the operator, Aiteo Eastern E&P Company Ltd, a spokesperson for Shell Petroleum Development Company of Nigeria Ltd (SPDC) said in a statement, led to the force majeure.
He stated that all enquiries on the cause of the leak and repair of the pipeline should be directed to the operator.
“The Shell Petroleum Development Company of Nigeria Ltd (SPDC) declared force majeure on Bonny light exports effective 08.00hrs Nigerian Time, May 17, 2018 following the shutdown of the Nembe Creek Trunk Line (NCTL) by the operator, Aiteo Eastern E&P Company Ltd,” the statement read.
Bonny Light oil is a high grade of Nigerian crude oil with high American Petroleum Institute (API) gravity (low specific gravity), produced in the Niger Delta basin and named after the prolific region around the city of Bonny.
The very low sulfur content of Bonny Light crude makes it a highly desired grade for its low corrosiveness to refinery infrastructure and the lower environmental impact of its byproducts in refinery effluent.
Already, shipments of Nigeria’s Bonny Light crude, one of the country’s major sources of oil revenue, are experiencing delays in loading. Cargoes of oil from the Bonny Light stream, for which exports are expected to reach around 195,000 barrels per day in June, had been delayed by a few days up to about a week.
For Angola, around six of the 43 cargoes in the Angolan June programme were still available, the schedule added. State oil company Sonangol has sold its June cargoes. The company sold a Girassol cargo to P66 this week, a trader said, at a differential thought to be a discount to dated Brent, relatively weak for the grade.
The July loading programme includes at least 48 cargoes, a schedule issued this week showed.