April 28, 2022

WWW.ENERGYINTEL.COM

West Africa Buffeted by Russian Export Chaos, Chinese Lockdowns

  • Angola is pinning its hopes on a recovery of the Chinese economy, now choked by lockdowns.

  • Nigeria is still feeling the competition from Russian Urals in its core European market.

Sellers of West African crude have their fingers crossed for stronger trade in June after May proved to be one of the worst months in years, particularly for Angola. But all realize that the global oil market — and West African crude’s place in it as the war in Ukraine unfolds — remains highly unpredictable.

As of Apr. 27, Angola, which unveiled a June program of just over 35 cargoes, or 1.12 million b/d, still had around seven May cargoes on the shelf, including three reoffered by term customer Unipec.

Nigeria reportedly had a handful of April cargoes to sell, along with a larger batch from May, as it released its own June programs.

Favorable Dynamics

Sellers point to some structural changes that should, in theory at least, work to West Africa’s advantage. For instances, the Brent/Dubai spread and exchange of futures for swaps have narrowed, which should in theory help arbitrage trade west.

“June will not be as bad as May, but prices won’t go through the roof," quipped one Angolan seller.

Benchmark crude prices remain volatile as the market tries to gauge the fallout from Russia’s invasion of Ukraine, with Brent futures fluctuating between just over $102 and $113 in recent weeks. At the same time, new signs of demand contraction have emerged.

Still, expectations that the West’s shunning of Russian crude would create massive shortages and ramp up demand for West African fare were disappointed. Rather, refiners postponed buying cargoes until the last minute, and the market became extremely prompt and relatively more localized within regions.

Large overhangs belied extremely high offer prices until differentials wafted down.

Estimated West African Exports, March 2022
('000 b/dVol.
Angola1,084
Cameroon52
Chad123
Congo (Brazzaville)209
Congo (Kinshasa)29
Cote d'Ivoire0
Equatorial Guinea85
Ghana184
Gabon233
Nigeria*1,490

Angola Hopes for China

Sellers of Angolan fare are hoping for a recovery in demand from China, which generally soaks up to 80% of the African country's barrels. They point to early signs that Beijing could soon ease lockdowns, refinery maintenance season will end, and orders will recover slightly in June.

These ambitions are tempered by the knowledge that Angola has limited ability to capitalize on Europe’s veto of Russian barrels. In past years a shortage of Russian Urals in Europe, which relies on the grade for 25% of its imports, would send refiners swarming for Angolan crude. Now regional grades — light, sour Johan Sverdrup, Latin American crudes and US Mars — provide alternatives.

And without early European prodding, Chinese buyers who take at least 400,000 b/d on a term basis can wait for Angolan cargoes to get distressed before they pick up spot cargoes. In May trading they hung around until the month's end before picking up some straggling barrels “at very low levels,” one seller said.

Price reporting firms marked Cabinda down by $1.30 to dated Brent plus 80¢/bbl and Girassol down $2.60 per barrel over the month to end last week at dated plus 20¢/bbl.

Estimated West African Exports to Asia, March 2022
('000 b/d)NigeriaAngolaOtherTotal
China08024251,227
India2796162402
Taiwan0653196
Indonesia92048140
Japan0000
Other*009292
Total3719286581,957

India Active

West African were encouraged by a recent wave of Asian buying. India’s IOC picked up at least 5 million bbl for June delivery and at least 4 million for July. This includes 2 million bbl each of Nigerian Usan and Agbami, a cargo each of Angolan Hungo and Clov, and a cargo each of Congolese Djeno, Cameroonian Kole and Equatorial Guinean Zafiro.

Indonesia’s Pertamina has picked up 4 million bbl of Nigerian crude including Escravos and Brass.

India is Nigeria’s most important customer in Asia. Its purchase of at least 13 million bbl of heavily discounted Russian Urals in March sent shivers down the spines of Nigerian sellers, who now fear their crude could be displaced for the foreseeable future. India's return to West African barrels is therefore much welcomed, although it remains to be seen whether India will opt for still more Urals.

Nigeria is already under pressure in Europe, its other main market, from imports of competitively priced US light, sweet fare following the US’ release of 30 million bbl of strategic crude stocks. Nigerian fare got some support when Libya, a rival supplier to Europe, was forced to shut in 500,000 b/d of output last week due to protests, which helped to put a floor on Nigerian differentials.

Price reporting firms marked Nigeria down over the month, with premiums on Escravos, Forcados and Qua Iboe more than halving to dated Brent plus $1.80/bbl dated plus $1.7/bbl and plus $1.50/bbl, respectively.

This was not reflected in Nigerian National Petroleum Corp.’s (NNPC) monthly official selling prices. NNPC, which often appears at variance with the market, raised Escravos by 7¢/bbl to dated Brent plus $2.96/bbl, Forcados by 21¢/bbl to $2.93/bbl and Qua by 6¢/bbl to dated plus $2.43/bbl.

Estimated Nigerian Loadings, March 2022
DateVol. ('000 bbl)SellerBuyerDest.
Abo 38.8° API, 0.14%S, TAN=0.98
16-17700Eni‡ Italy
Agbami 48.28° API, 0.04%S, TAN=0.05
2-3975ChevronBP
IOCIndia
11-12975EquinorExxon
19-20975ChevronTotal
IOCIndia
28-29975ChevronBP
Akpo
1-31,000CNOOCTotal
IOCIndia
14-151,000PrimeShell
Vitol
MubadalaBrazil
27-281,000CNOOCShellLate sale
Amenam 39.4° API, 0.1%S, TAN=0.30
15-16950Total Durban
28-29950NNPC-BonoP66USEC
Antan 28° API, 0.3%S, TAN=0.34
10-11950NNPC-MocohCepsaSpain
Anyala Madu
10-11650NNPC-MercuriaGazpromMed/Europe
22-23650VitolPetrobrasBrazil
Bonga 29.39° API, 0.25%S, TAN=0.46
4-5950NNPC-VitolHPCLIndia
7-23950NNPC-SaharaGlencore
IOCIndia
21-22950ShellCepsa
Shell=
Bonny Light 35.09° API, 0.15%S, TAN=0.25
11-12500NNPC-Vitol Europe
Brass River 40.1° API, 0.18%S, TAN=0.13
^950Eni Mercuria
^500Oando-Vitol Italy
EA 35° API, 0.09%S, TAN=0.13
15-16950NNPC-VitolCressierSwitzerland
Egina 27.3° API, 0.165%S, TAN=0.24
3-41,000PrimeGlencore
SinesPortugal
12-131,000SapetroShell
Vitol
SIRAbidjan
17-181,000TotalTuprasTurkey
24-251,000NNPC-SaharaTotalLate sale
29-301,000TotalIrvingCanada
Erha 35.4° API, 0.18%S, TAN=0.13
1-5950ExxonLitasco
CepsaSpain
19-21950NNPC-LitascoTotal
BPMed/Europe
21-22950ShellExxon
IOCIndia
Escravos 32.4⁰ API, 0.17%S, TAN=0.56
2-3950NNPC-SaharaGlencore
PertaminaIndonesia
11-12950ChevronRepsolSpain
18-19950NNPC-BPRepsolSpain
26-27950ChevronGlencore
RepsolSpain
Forcados 31.5⁰ API, 0.22%S, TAN=0.33
2-3950SeplatRepsolSpain
5-6950NPDC-VitolIOCIndia
12-131,050Shell/indigPreemSweden
17-18950NNPC-PetrocamMercuria
RepsolSpain
21-22950NPDC/ShorelineEniItaly
25-26950NPDCShellWilhelmshafen
29-30950NNPC
Jones Creek 30.01° API, 0.35%S
^950VitolExxon
Okono 40.6⁰ API, 0.07%S, TAN=0.2
no info
Okoro
no info
Okwuibome 35.39° API, 0.02
16-20950NNPC-VitolDeltaUSEC
Pennington
1-22950ChevronMercuria
KleshNW Europe
Qua Iboe 37.6° API, 0.11%S,TAN=0.33
2-3950ExxonLitasco
TotalNW Europe
7-8950NNPC-MatrixEquinor
PertaminaIndonesia
14-15950Exxon IOC†India
20-21950NNPC-OandoExxon
IOC†India
26-27950ExxonPertaminaIndonesia
Usan 29⁰ API, 0.27%S, TAN=1.53
10-11950NNPC-BPValeroCanada
20-21950CNOOCVitollate sale
Yoho 40.5° API, 0.06%S, TAN=0.23
17-18800ExxonMercuria
DeltaUSEC

Estimated Angolan Loadings, March 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cabinda 32.2° API, 0.15%S, TAN=0.11
4-5950Sonangol Sinochem (t)
UnipecChina
19-20950ChevronPetroineosChina
31-01950ChevronUnipecChina
Clov 33.17° API, 0.25%S, TAN=0.54
1-21,000Total‡ Europe
10-111,000EquinorCPCTaiwan
21-221,000Total Sonangol
UnipecChina
Dalia 23.4⁰ API, 0.49%S, TAN=1.54
8-9950Sonangol IOC (t)India
16-17950Sonangol Sinochem (t)China
24-25950Equinor late sale
< Sonangol Sinochem (t)China
Gimboa 25.3° API, 0.56%S, TAN=0.65
no cargoes
Gindungo 32° API, 0.58% S, TAN=0.54
15-16950Sonangol Sinochem (t)China
Girassol 30.21° API, 0.34%S, TAN=0.39
9-101,000Sonangol CPCTaiwan
20-211,000Sonangol ChevronUSWC
31-011,000EquinorUnipecChina
Hungo 29.4° API, 0.59%S, TAN=0.46
1-2950SonangolUnipec (t)China
>30-31950ExxonBP
Kissanje 30.3° API, 0.36%S, TAN=0.51
20-21950SonangolSinochem (t)China
Mondo 27.5° API, 0.438%S, TAN=0.922
>14-15950ExxonUnipecChina
Mostarda 28° API, 1.12%S, TAN=0.53
3-4950SSIUnipecChina
11-12950ExxonTotal
UnipecChina
19-20950SonangolSinochem (t)
CNOOC
JinshengChina
27-28950TotalSonangol
Sinochem (t)
TeapotChina
Nemba 37° API, 0.276%S, TAN=0.24
6-7950SonangolUnipec (t)China
14-15950ChevronEnapChile
21-22950Sonangol Sinochem (t)China
28-29950Total Sonangol
UnipecChina
Olombendo 35.2° API, 0.12%S, TAN=0.11
2-3950EniUnipecChina
17-18950SonangolSinochem (t)China
Palanca 37.2° API, 0.18%S TAN=0.03
no cargoes
Pazflor 24.7° API, 0.4%S,TAN=1.63
10-11950BPJinaoChina
22-23950SonangolSinochem (t)
CNOOCChina
Plutonio 33.2° API, 0.37%S, TAN=0.12
12-131,000SIPCUnipecChina
Sangos 31⁰ API, 0.6%S, TAN=0.29
5-6950SonangolSinochem (t)China
21-22950EniMercuria
HongrunChina
Saturno 27.6° API, 0.8%S, TAN=0.53
2-3950BPUnipecChina
18-19950SonangolIOC (t)India
Saxi-Batuque 34.6° API, 0.25%S, TAN=0.59
17-18950EniBP
CNOOCChina

Other West African Loadings, March 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cameroon
Kole 32.06° API, 0.33%S, TAN=0.5
15-24950SNHP66
Glencore
CepsaSpain
Lokele
10-14650SNHCepsaSpain
Chad
Doba 25.85° API, 0.09%S, TAN=2.23
3-4950CNPC/ClivedenGlencore
UniperFujairah
11-12950CEFCPetroineosChina
19-20950SHT/GlencorePetroineosChina
28-29950CNPC/ClivedenCPCTaiwan
Congo (Brazzaville)
Djeno 27.6° API, 0.341%S, TAN=0.69
6-7920EniUnipecChina
11-12920SNPC-GlencoreUnipecChina
16-17920TotalIOCIndia
20-21920ChevronGlencore
teapotChina
25-26920TotalteapotChina
30-31920SNPC-SaharaTotal
PetroineosChina
Nkossa 39.92° API, 0.06%S, TAN=0.05
18-19950TotalExxon
GalpSines
Congo (Kinshasa)
Coco
12-13900PerencoBP
PertaminaIndonesia
Cote d'Ivoire
Baobab
no cargoes
Yombo
no info
Espoir
< CNR-Vitol
Equatorial Guinea
Aseng
9-10650Noble SarasEurope
New Zafiro 30.2° API, 0.25%S, TAN=0.74
11-121,000ExxonIOCIndia
Ceiba
26-271,000KTEGIBP
ChemchinaChina
Gabon
Rabi Light 33.2° API, 0.14%S, TAN=0.08
14-15950PerencoGlencore
UnipecChina
27-28950PerencoGlencore
SK Corp.S.Korea
Rabi Blend 34.10° API, 0.06%S
14-15950AssalaShell
HenguanMalaysia
30-31950GOCVitol
SK Corp.S. Korea
Mandji
2-3930PerencoGlencore
UnipecChina
20-21930PerencoZhenhua
JinchengChina
Etame 35.21⁰ API, 0.06%S, TAN=0.2
14-16600VaalcoExxon
PertaminaIndonesia
Lucina
no info
Oguendjo 34⁰ API, 0.67%S, TAN=0.6
no info
Dussafu
15-30950BW OffshoreBPLate sale
Ghana
Jubilee 36.75° API, 0.29%S, TAN=0.05
2-3950KosmosGlencore
UnipecChina
12-13950TullowShell
22-23950GNPCUnipecChina
Sankofa 28° API, 030%S, TAN=0.08
5-6950GNPCGemcorp
ShellS. Africa
30-31950EniHengyuanChina
Ten 33.0° API, 0.43% S, TAN=0.05
7-8950KosmosTrafigura
P66USEC

Christina Katsouris, London