May 31, 2022

WWW.ENERGYINTEL.COM

West African Producers Hike Prices, Expecting High Demand

  • Sellers hike West African prices to large premiums over dated Brent as product prices hit new record levels.
  • The June overhang has mostly disappeared, but July is off to a slow start with traders assessing lofty prices.
  • Angolan crude might sail more to Europe as China faces steep backwardation and high freight costs, and has cheap Russian crude as an alternative.

Sellers of West African crude hiked offer prices to record levels this week, emboldened by tight supplies of light crude in key market Europe and a tentative easing of lockdowns in China. However, deals have been limited by multiple uncertainties, with buyers delaying decisions until the last minute.

The EU embargo against Russian seaborne imports announced today has crystalized the legal position and could exacerbate the current tightness in Europe — which imports much of Nigeria's output and relied on Russia for around 25% of its crude imports in 2021 — although traders and refiners had already been avoiding Russian cargoes since the start of the Ukraine invasion late February.

The details of the embargo and the impact on West African markets have yet to be gauged. “There are so many geopolitical factors and so many moving parts,” it is difficult to predict what will happen next, one trader volunteered.

No More Overhang

The large overhangs that clouded West African crude for much of the past year or so have gone. As of May 31, the region had cleared nearly all June-loading cargoes. However, the trade in July cargoes has so far been limited as sellers test the market to see how much buyers will pay.

The global market has tightened in the run-up to the summer driving season in Europe and the US where crude and product stocks have shrunk. The tightness is at its most extreme in Europe, which saw dated Brent jump to $125, up $10 in a week. Diesel prices have reached record highs in Europe at $1,248 per ton.

The shortage has prompted some international oil companies to keep more production for their own systems: Eni is taking a cargo of Angolan Olombendo, that it would normally sell, home for refining. Exxon Mobil is doing the same with a cargo of Mostarda, one Angolan trader said.

Estimated West African Exports, April 2022
('000 b/d)Vol.
Angola1,057
Cameroon32
Chad158
Congo (Brazzaville)216
Congo (Kinshasa)30
Cote d'Ivoire14
Equatorial Guinea100
Ghana158
Gabon227
Nigeria*1,236

Pump Up Premiums

In Europe, Nigeria’s most important market, demand for travel and transport fuels is bouncing back post lockdown. Record gasoline margins — which pierced $40 per barrel last week — and resurging diesel margins have boosted refiners’ demand for light crudes with high yields of gasoline and middle distillates.

At the same time light crude is in even shorter supply than usual due to maintenance at two North Sea platforms, combined with reduced output from Libya which has fallen to just under 700,000 barrels per day.

This tightness emboldened sellers to hike Nigerian fare to record levels, with some grades offered at premiums ranging from $6/bbl to $11/bbl, although few cargoes had changed hands.

Price reporting firms assessed both Escravos and Forcados at dated Brent plus $6.50/bbl, up from week-earlier levels of dated plus $4.50/bbl and $4.25/bbl, respectively. They assessed Qua Iboe at dated plus $5.75/bbl, up from plus $3.50/bbl.

Such high prices have already deterred buyers in India — Nigeria’s key Asian market. Indian Oil Corp., its largest customer, took no Nigerian fare at a tender last week — and appears to be stocking up on cheaper Russian Urals.

Sellers have also hiked Angolan fare, with Cabinda offered at dated Brent plus $4.50/bbl on Monday, having been assessed at dated plus $2.75/bbl last week, and dated minus 30¢/bbl in mid-May. While much of the program has already been placed on a term basis, only a few spot trades have been struck.

Estimated West African Exports to Asia, April 2022
('000 b/d)NigeriaAngolaOtherTotal
China0673219892
India2909562447
Taiwan0000
Indonesia95034129
Japan0000
Other*0336295
Total3858013771,563

What About Asia?

Angolan sellers differ over market prospects. Most had been betting on a stronger July market after improved arbitrage freight costs and market structure brought Chinese buyers back for June cargoes.

However, backwardation has steepened again, freight is rising and the Brent Dubai Exchange of Futures for Swaps widened to an unworkable $12.40/bbl in Singapore on Monday.

“The Chinese are heavily exposed to the flat price, so the appeal of cheap Russian crude must be strong,” said one Angolan seller commenting on speculation that China will fill up its strategic petroleum reserve with grades like Urals at dated Brent minus a steep discount, perhaps as much as $40/bbl.

If China scoops up the Russian crude, its traders could sell their term Angolan cargoes into Europe to lessen the hit from backwardation.

More generally, China’s own recovery could be patchy. While the government eases lockdowns in Shanghai, concerns remain that it could tighten restrictions in Beijing, the capital and other places.

Estimated Nigerian Loadings, April 2022
DateVol. ('000 bbl)SellerBuyerDest.
Abo 38.8° API, 0.14%S, TAN=0.98
no cargoes
Agbami 48.28° API, 0.04%S, TAN=0.05
5-6975NNPC-OandoExxonLe Havre
16-171,000ChevronIOCIndia
24-25975ChevronBP†Europe
Akpo
9-101,000TotalIOC†India
22-231,000CNOOCIOC†India
Amenam 39.4° API, 0.1%S, TAN=0.30
16-20950NNPC-PetrocamTotal
PetroineosLe Havre
25-30950NNPC-MocohShell
PetroineosFinnart
Antan 28° API, 0.3%S, TAN=0.34
20-21300MonipuloShell†
Cepsa Spain
Anyala Madu
8-9600NNPC-MercuriaDeltaUSEC
27-28864VitolShell
Cepsa Spain
Bonga 29.39° API, 0.25%S, TAN=0.46
>2-3950NNPC-SaharaGlencore
IOC†India
14-19950ShellPreemSweden
22-23950NNPC-BonoP66
Exxon
Cepsa Spain
Bonny Light 35.09° API, 0.15%S, TAN=0.25
no info
Brass River 40.1° API, 0.18%S, TAN=0.13
^575Oando-Vitol
^500NNPC-Vitol†SasolS. Africa
^500Eni‡ Genoa
EA 35° API, 0.09%S, TAN=0.13
17-191,000Total Europe
Egina 27.3° API, 0.165%S, TAN=0.24
7-81,000CNOOCVitol
BPEurope
14-151,000SapetroShell
GalpPortugal
21-221,000NNPC-SaharaPetroineos
ShellRotterdam
28-291,000PrimeTrader
IrvingCanada
Erha 35.4° API, 0.18%S, TAN=0.13
13-14950NNPC-SaharaChevron
BPEurope
< ShellAncapUruguay
Escravos 32.4⁰ API, 0.17%S, TAN=0.56
2-3950NNPC-traderShell
TotalEurope
3-14950ChevronPertaminaIndonesia
22-23950NNPC-SaharaExxon
BPEurope
29-30950NNPC-LeveneEquinor
PertaminaIndonesia
Forcados 31.5⁰ API, 0.22%S, TAN=0.33
1-2950NNPC-MRSVitol
SIRC'Ivoire
5-6950NNPC-traderChevron
Vitol
IOCIndia
10-11950NNPC-MRSTotalEurope
13-14950TotalPK OrlenPoland
18-19950ChevronIOCIndia
23-241,050ShellChevron
TuprasTurkey
Jones Creek 30.01° API, 0.35%S
no info
Okono 40.6⁰ API, 0.07%S, TAN=0.2
24-25900NNPC-traderPetroineosEurope
Okoro
no cargoes
Okwuibome 35.39° API, 0.02
16-17950Sterling-VitolPertaminaIndonesia
Pennington
no cargoes
Qua Iboe 37.6° API, 0.11%S,TAN=0.33
6-7950ExxonIOCIndia
10-11950ExxonDeltaUSEC
16-17950NNPC-BPVitol
IOCIndia
20-21950NNPC-TotalMercuria
DeltaUSEC
25-26950NNPC-OandoP66USEC
Usan 29⁰ API, 0.27%S, TAN=1.53
19-20950ChevronIOCIndia
Yoho 40.5° API, 0.06%S, TAN=0.23
24-25950NNPC-Vitol BPNW Europe

Estimated Angolan Loadings, April 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cabinda 32.2° API, 0.15%S, TAN=0.11
14-15950TotalIOC India
22-23950ChevronBPEurope
Clov 33.17° API, 0.25%S, TAN=0.54
8-91,000SonangolSinochem (t)China
18-191,000TotalSinochem China
28-291,000BPExxon
Unipec†China
Dalia 23.4⁰ API, 0.49%S, TAN=1.54
8-9950SonangolUnipec (t)China
16-17950SonangolChevron
RepsolSpain
24-25950TotalSinochem China
30-01950SonangolSinochem (t)China
Gimboa 25.3° API, 0.56%S, TAN=0.65
no cargoes
Gindungo 32° API, 0.58% S, TAN=0.54
7-8950SSIUnipec China
Girassol 30.21° API, 0.34%S, TAN=0.39
11-121,000SonangolUnipec
PTTThailand
22-231,000SonangolExxon
P66
Glencore (S)
Hungo 29.4° API, 0.59%S, TAN=0.46
16-17950SonangolSinochem (t)China
Kissanje 30.3° API, 0.36%S, TAN=0.51
7-8950ExxonUnipecChina
Mondo 27.5° API, 0.438%S, TAN=0.922
no cargoes
Mostarda 28° API, 1.12%S, TAN=0.53
4-5950SSIUnipecChina
12-13950TotalUnipecChina
20-21950SonangolSinochem (t)China
28-29950Exxon Europe
Nemba 37° API, 0.276%S, TAN=0.24
4-5950ChevronIOC India
12-13950SonangolSinochem (t)China
21-22950ChevronEnapChile
Olombendo 35.2° API, 0.12%S, TAN=0.11
13-14950SonangolIOC (t)India
29-30950EniExxonEurope
Palanca 37.2° API, 0.18%S TAN=0.03
14-15985SomoilUnipecChina
Pazflor 24.7° API, 0.4%S,TAN=1.63
3-4950TotalExxonRotterdam
14-15950EquinorCNOOCNingbo
25-26950ExxonTotalRotterdam
Plutonio 33.2° API, 0.37%S, TAN=0.12
5-61,000SonangolUnipec (t)China
17-181,000BPP66USEC
Sangos 31⁰ API, 0.6%S, TAN=0.29
8-9950SonangolUnipec (t)China
23-24950EniUnipec China
Saturno 27.6° API, 0.8%S, TAN=0.53
3-4950SSIUnipecChina
19-20950SonangolUnipec (t)China
Saxi-Batuque 34.6° API, 0.25%S, TAN=0.59
20-21950SonangolSinochem (t)China

Estimated Other West African Loadings, April 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cameroon
Kole 32.06° API, 0.33%S, TAN=0.5
no cargoes
Lokele
25-26950Addax-UnipecSarasEurope
Chad
Doba 25.85° API, 0.09%S, TAN=2.23
1950 UniperFujaira
5950Exxon Europe
11950CNPC China
22950SHT-Glencore Europe
29950CNPCTotalRotterdam
Congo (Brazzaville)
Djeno 27.6° API, 0.341%S, TAN=0.69
2-3920SNPCBayegan
UnipecChina
7-8920SNPC-Unipec China
12-13920PerencoUnipecChina
17-18920TotalIOCIndia
21-22920SNPC-TrafiguraShell
26-27920SNPC-TrafiguraSarasEurope
Nkossa 39.92° API, 0.06%S, TAN=0.05
10-11950EniSarasSardinia
Congo (Kinshasa)
Coco
7-8900PerencoBP
ORLIsrael
Cote d'Ivoire
Baobab
no info
Espoir
4-5430CNR-Vitol†SasolS. Africa
Yombo
no info
Equatorial Guinea
Aseng
no info
New Zafiro 30.2° API, 0.25%S, TAN=0.74
1-21,000GEPetrolZhenhua
RepsolSpain
22-231,000ExxonRepsolSpain
Ceiba
23-241,000GEPetrolZhenhua
Sinochem
ExxonFos
Gabon
Rabi Light 33.2° API, 0.14%S, TAN=0.08
11-12950Maurel & PromVitol
SK EnergyS. Korea
24-25950 GOCVitol
Rabi Blend 34.10° API, 0.06%S
^600AssalaShell
SK Energy†S. Korea
^1,010AssalaShell
PertaminaIndonesia
Mandji
9-10930PerencoTrafigura
IOCIndia
28-29930 GOCVitol
IOCIndia
Etame 35.21⁰ API, 0.06%S, TAN=0.2
2-3300VaalcoExxon
Vitol
SK Energy†S. Korea
Lucina
no info
Oguendjo 34⁰ API, 0.67%S, TAN=0.6
30-011,150PerencoGlencore
RepsolSpain
Dussafu
no info
Ghana
Jubilee 36.75° API, 0.29%S, TAN=0.05
2-3950KosmosUnipecChina
12-13950TullowUnipecChina
23-24950JOHLUnipecChina
Sankofa 28° API, 030%S, TAN=0.08
23-24950GNPC-LitascoTuprasTurkey
Ten 33.0° API, 0.43% S, TAN=0.05
17-18950TullowGlencore (S)
P66USEC

Christina Katsouris, London