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European importers' appetite for West African crude oil barrels
seems to be quite strong lately. Nigeria's Egina, one of the newest
oil grades exported, has been proving very popular across the
continent. Barrels of this medium-sweet crude oil have been
appealing to refiners primarily in the Netherlands, Italy, and
France due to its high distillate yields. Availability of Egina
currently stands marginally above 200 thousand b/d, after becoming
available in late 2018 and getting exported since February 2019.
India has also been importing some barrels of Egina, with other
major importers such as China and the US already having taken some
cargoes.
Due to their strong distillate refinery margins, grades like
Forcados and Egina have been supporting demand for distillate-rich
grades from West Africa. Volumes have been clearing quickly for
August and early September. Loadings currently stand above 200
thousand b/d, having been supported by the stable production.
Nigerian production of crude oil and condensate has been between
1.9 and 2.1 million b/d so far this year, up around 11%
year-on-year, with most additions referring to Egina. This has been
the biggest oil and gas investment in the country, worth 16 billion
USD. Total operates the project, with a 24% stake, with the
participation of CNOOC, Vitol, Africa Oil, and Delonex Energy.
A very similar case to report for Angola, with only a few
cargoes remaining available for loadings in September. The strong
demand, especially from Chinese independent refineries, pushed most
offers up so far, at least by 50 cents compared to the previous
month. Some European refineries have been looking to secure more
volumes, as they expect imports from Russia (mainly Baltic Sea) to
further decline, while diesel refining margins add more support for
this trend to develop. Meanwhile, the price of the Nemba grade has
reached new record highs, with a premium of around 1.50 USD to
dated Brent, primarily due to stronger European gas oil demand.
As data by IHS
Markit's Commodities at Sea show, the continent has been
importing more than 800 thousand b/d of crude oil from Nigeria
since February 2019, with volumes from Angola and other West Africa
countries has increased during the last couple of months. Flows
from North Africa, primarily Libya, remain quite strong as
well.
Posted 28 August 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
