NIGERIA – Crisis stricken Nigerian oil industry has received yet another blow in form of reduced demand for crude oil from the United States which has been ramping up its shale oil production in recent years.
A report from Nairametrics indicated that United States slashed its imports of Nigerian crude oil to 9.37 million barrels in the first five months of this year.
This according to Naira Metrics was 11.67 million barrels lower than what it bought in the same period of 2019.
Data from the US Energy Information Administration revealed that the US imported 21.03 million barrels of Nigeria crude from January to May 2020, with the highest monthly import volume being 2.12 million barrels, compared to 11.78 million barrels in 2019.
US oil purchases plunged by 63.03 per cent in the first quarter of 2020 to 5.53 million barrels, compared to the last quarter of 2019 when it bought 15.07 million barrels from Nigeria.
The US has significantly reduced imports of Nigerian crude oil in the past few years as the oil produced in its shale operations is similar to the light sweet Nigerian crude.
US imports of Nigerian crude fell from 148.48 million barrels in 2012 to 87.40 million barrels in 2013 on the back of this shale oil boom.
As US Shale oil producers continue to ramp up production, the share of imports continues to shrink, posing a major threat to oil exporting countries such as Nigeria.
Nigeria is particularly at risk of having stranded crude oil inventories given that the US was once the destination for about 40 per cent to 50 per cent of the country’s cargoes.
In August, Africa Inc reported that the Nigeria oil industry was facing yet another threat to its survival in the form of increased inflow of exports from the United States to its European Market.
S&P Global Platts had also reported in August that oil traders were saying that the spot market for September-loading cargoes from Nigeria had not seen any activity for more than two weeks.
It however yet to been what Nigeria (which heavily relies on oil revenues to support government expenditure) plans to do to address the challenge of increased competition from US shale oil producers