July 4, 2022

WWW.ENERGYINTEL.COM

West African Crude Sells Fast at Record Prices

  • Nigerian bullish prices, buoyed by European demand, are "dragging up" Angola's fixtures, while more than half of Angola's August program has cleared.
  • India's huge offtakes of Russian crude are putting pressure on West African flows to Asia.

West Africa’s August-loading cargoes are moving at a fast pace — and record prices — thanks to brisk demand in Europe and the return of Chinese buyers for spot cargoes.

As of Jun. 29, heavyweight producers Angola and Nigeria had cleared all but a few July-loading cargoes retained for optimization — marking the second month in a row with no overhangs clouding the start of the new trading month.

The picture for August is harder to read, but Angolan sellers say they have already shifted more than half of the new 1.1 million barrel per day August program already. The sellers report having sold 15 spot cargoes (460,000 b/d) on top of the 11 or so (330,000 b/d) regularly lifted on a term basis by Chinese traders.

Nigerian sellers are thought to have sold around 13 cargoes (around 400,000 b/d) to refiners, while traders bought several more to reoffer to the market, according to one trader.

Estimated West African Exports, May 2022
('000 b/d)Vol.
Angola1,194
Cameroon82
Chad123
Congo (Brazzaville)322
Congo (Kinshasa)23
Cote d'Ivoire32
Equatorial Guinea65
Ghana123
Gabon177
Nigeria*1,339

Busy Summer

West Africa is riding a wave of high benchmark prices and product scarcity — particularly in Europe, the center of gravity for Nigeria, forcing refiners to replace Russian crude with a mix of US, Brazilian, West African, North Sea and Mediterranean fare.

However, it is a fragile bull market, threatened by a potential recession and demand erosion.

The risks were underscored this week when the US Energy Information Administration reported gasoline and diesel consumption down 2.4% and 7.4% on year-earlier levels in the week ending Jun. 24. Meanwhile, dated Brent shed more than $8 per barrel in the week to Jun. 23, closing at around $114.50/bbl. It regained some of the losses in subsequent days to $122/bbl on Jun. 28, only to tumble back to $115/bbl in early Jul. 1 trading.

Angolan Opportunity

Angolan sellers have found the Ukraine crisis and the shortage of crude in Europe very supportive. Long reliant on China for 60% to 70% of its exports, Angola is cashing in on displaced demand from Europe and the US. This has forced Angola’s returning Chinese customers to bid early and high for spot cargoes.

Traders report that Unipec alone, which had been offering some Angola term cargoes out during the lockdowns, has already picked up five August spot cargoes, including two of Nemba, and one each of Cabinda, Sangos and Hungo.

“We are also being dragged up by Nigerian prices,” said one Angolan seller. Lower sulfur, lighter grades like Cabinda and Girassol appear most popular, with Sonangol offering a cargo of Girassol at more than dated Brent plus $6/bbl. The grade was last week assessed at dated plus $3.50 by price reporting firms.

Heavier, more acidic grades like Dalia command more modest premiums having reportedly changed hands at dated plus $1/bbl.

Estimated West African Exports to Asia, May 2022
('000 b/d)NigeriaAngolaOtherTotal
China07063311,037
India224155123502
Taiwan032032
Indonesia1213123175
Japan0000
Other*31323194
Total3769565081,840

Asian Perspective

The need to compete for West African crude appears to have outweighed Chinese concerns over backwardation, which limits the attractions of long-haul crude, and the lack of arbitrage from West to East. As of Jun. 29, the July/August timespread was $5/bbl, while the August premium over September was $3.50/bbl. Dated Brent’s premium over Dubai is around $9/bbl in July and around $8/bbl for August.

The picture is complicated by flows of Russian crude to Asia. Chinese imports of Russian crude jumped by 390,000 b/d from April to 1.99 million b/d in May — a hike of 705,000 b/d on May 2021 levels, according to reports.

Russian barrels are being mopped up by China’s teapot refiners, while state-owned traders are trying to optimize their portfolios. “We cannot afford to compete with Europe in the spot market,” complained one trader. “We are offering, we are optimizing [some Angolan cargoes]."

India, Nigeria's most important Asian customer, bought 1.1 million b/d of Russian crude between Jun. 1-22, up from an average 50,000 b/d last year, according to some reports. Clearly they are finding Russian barrels cheaper than pricey Nigerian fare.

Still, Indian refineries are replacing only part of their normal crude slate. “They are still buying Nigerian [crude], just a bit less than usual,” said one Asia source.

Nigeria, whose exports of crude and condensates dropped below 1.4 million b/d in May, is enjoying strong demand for grades with the highest yields of distillates. Egina appears the star of the show, having been offered at dated Brent plus $13/bbl last week. Offers for Escravos and Forcados remain near all-time highs at just over dated Brent plus $9/bbl. Qua Iboe was offered at dated plus $6/bbl.

Estimated Nigerian Loadings, May 2022
DateVol. ('000 bbl)SellerBuyerDest.
Abo 38.8° API, 0.14%S, TAN=0.98
1-2700EniCepsaSpain
Agbami 48.28° API, 0.04%S, TAN=0.05
1-2975ChevronIOCIndia
10-11975FamfaExxonSingapore
19-20975NNPC-VitolIrvingCanada
27-28975Chevron IOCIndia
Akpo
4-51,000SapetroTotalEurope
16-171,000CNOOCVitol
IOCIndia
29-301,000PrimeShell
CepsaSpain
Amenam 39.4° API, 0.1%S, TAN=0.30
7-8950TotalSasolS. Africa
>22-23950NNPC-OandoGlencore
CepsaSpain
Antan 28° API, 0.3%S, TAN=0.34
25-26950AddaxUnipecChina?
Anyala Madu
9-10650NNPC-VitolCepsa†Spain
24-25650NNPC-BonoP66USEC
Bonga 29.39° API, 0.25%S, TAN=0.46
20-21950ShellCepsaSpain
25-26950EniTotal†France
Bonny Light 35.09° API, 0.15%S, TAN=0.25
no info
Brass River 40.1° API, 0.18%S, TAN=0.13
>30-01950NNPC-LeveneSahara
PertaminaIndonesia
>26-27950NNPC-SaharaTotalEurope
EA 35° API, 0.09%S, TAN=0.13
15-16950NNPC-EyrieEquinor
PetroineosEurope
Egina 27.3° API, 0.165%S, TAN=0.24
6-7950NNPC-SaharaTotal
PetrogalPortugal
13-14950Total§Petrogal
Total
ORLIsrael
20-21950CNOOCTotal
PreemSweden
27-28950PrimeShell
SIRC'Ivoire
Erha 35.4° API, 0.18%S, TAN=0.13
12-13950NNPC-DukeBP
AncapUruguay
26-27950ExxonCepsaSpain
Escravos 32.4⁰ API, 0.17%S, TAN=0.56
>1-2905NNPC-LeveneEquinorIndonesia
Pertamina
>8-9950NNPC-SaharaGlencore
PertaminaIndonesia
16-17950ChevronPertaminaIndonesia
23-24950NNPC-BP†RotterdamEurope
Forcados 31.5⁰ API, 0.22%S, TAN=0.33
1-21,050Shell/indig1SIR C'Ivoire
5-6950NNPC-SaharaSIR C'Ivoire
7-81,000Shell/Elcrest/PanoceanCepsaSpain
15-16950NPDC-SaharaShell
TuprasTurkey
22-23997NNPC-VitolShell
IOCIndia
27-28997ShellVitol
TamoilEurope
Jones Creek 30.01° API, 0.35%S
^1,050Neconde-GlencoreExxon
SavonaItaly
Okono 40.6⁰ API, 0.07%S, TAN=0.2
4-5950NNPC-MochoPetroineos
DeltaUSEC
Okoro
20-21950ShellMRPLIndia
Okwuibome 35.39° API, 0.02
5-6950NNPC-VitolCepsa†Spain
20-21950NNPC-VitolDeltaUSEC
Pennington
no cargoes
Qua Iboe 37.6° API, 0.11%S,TAN=0.33
>6-7950NNPCTotal†Rotterdam
>14-15950ExxonDeltaUSEC
>21-22950ExxonCepsaSpain
>25-26950NNPC-MercuriaCepsaSpain
< NNPC-BP
Usan 29⁰ API, 0.27%S, TAN=1.53
5-6950TotalIOCIndia
26-27950ExxonIOCIndia
Yoho 40.5° API, 0.06%S, TAN=0.23
>25-26950ExxonDeltaUSEC

Estimated Angolan Loadings, May 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cabinda 32.2° API, 0.15%S, TAN=0.11
11-12950ChevronPertaminaIndonesia
24-25950EniPetrogalPortugal
Clov 33.17° API, 0.25%S, TAN=0.54
8-91,000EquinorCPCTaiwan
18-191,000TotalEquinor
IOCIndia
27-281,000Exxon‡ Europe
Dalia 23.4⁰ API, 0.49%S, TAN=1.54
30-01950SonangolSinochem (t)China
7-8950SonangolHMELIndia
15-16950SonangolSinochem (t)China
23-24950BPRepsolSpain
Gimboa 25.3° API, 0.56%S, TAN=0.65
no info
Gindungo 32° API, 0.58% S, TAN=0.54
4-5950ExxonUnipecChina
30-31950Total SinochemChina
Girassol 30.21° API, 0.34%S, TAN=0.39
3-41,000SonangolSinochem (t)China
14-151,000Total PTTThailand
25-261,000SonangolUnipec
ValeroCanada
Hungo 29.4° API, 0.59%S, TAN=0.46
7-8950BPteapotChina
25-26950ExxonIOCIndia
Kissanje 30.3° API, 0.36%S, TAN=0.51
1-2950BPteapotChina
14-15950Exxon‡ Europe
Mondo 27.5° API, 0.438%S, TAN=0.922
4-5950BPteapot China
Mostarda 28° API, 1.12%S, TAN=0.53
6-7950Total RongshengChina
14-15950SonangolSinochem (t)China
22-23950SSIUnipecChina
30-31950Total RongshengChina
Nemba 37° API, 0.276%S, TAN=0.24
7-8950SonangolSinochem (t)China
20-21950Eni‡SinochemChina
30-31950ChevronSinochem China
Olombendo 35.2° API, 0.12%S, TAN=0.11
19-20950SSIUnipecChina
Palanca 37.2° API, 0.18%S TAN=0.03
30-31660Maurel & PromGlencore
Pazflor 24.7° API, 0.4%S,TAN=1.63
7-8950SonangolUnipecChina
19-20950TotalUnipecChina
Plutonio 33.2° API, 0.37%S, TAN=0.12
5-6950SonangolIOCIndia
19-20950SSIUnipec
P66USEC
30-31950SonangolSinochem (t)China
Sangos 31⁰ API, 0.6%S, TAN=0.29
16-17950SSIUnipecChina
29-30950EniUnipecChina
Saturno 27.6° API, 0.8%S, TAN=0.53
3-4950BPUnipecChina
18-19950EquinorUnipecChina
Saxi-Batuque 34.6° API, 0.25%S, TAN=0.59
17-18950ExxonHMEL India

Estimated Other West African Loadings, May 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cameroon
Kole 32.06° API, 0.33%S, TAN=0.5
1-5950SNHShell
IOCIndia
20-25950PerencoGlencore
IOCIndia
Lokele
25-27650SNHSarasMed/Europe
Chad
Doba 25.85° API, 0.09%S, TAN=2.23
5-6950CNPCSenning
UnipecChina
12-13950Petronas
19-20950CNPCGlencore
UnipecChina
27-28950CNPCteapotChina
Congo (Brazzaville)
Djeno 27.6° API, 0.341%S, TAN=0.69
6-7920TotalIOCIndia
11-12920SNPC-TrafiguraUnipecChina
16-17920ChevronUnipecChina
20-21920SNOC-TrafiguraTotal
teapotChina
25-26920TotalTrafigura
UnipecChina
29-30920SNPC UnipecChina
Nkossa 39.92° API, 0.06%S, TAN=0.05
>2-3950ChevronGalpPortugal
28-29950SNPCSahara
GalpPortugal
Congo (Kinshasa)
Coco
17-18700PerencoBP
PertaminaIndonesia
Cote d'Ivoire
Baobab
24-251,000CNR-traderValeroPembroke
Espoir
no info
Yombo
no info
Equatorial Guinea
Aseng
no info
New Zafiro 30.2° API, 0.25%S, TAN=0.74
16-171,000GEPetrolExxon
IOCIndia
Ceiba
21-22950KTEGIBP†Rotterdam
Gabon
Rabi Light 33.2° API, 0.14%S, TAN=0.08
no cargoes
Rabi Blend 34.10° API, 0.06%S
11-12950Assala-ShellSK EnergyS. Korea
26-27650GOCVitol
ORLIsrael
Mandji
>10-30930GOC-VitolChemchinaChina
Etame 35.21⁰ API, 0.06%S, TAN=0.2
>13-14600VaalcoExxon
SarasMed/Europe
26-27450VaalcoExxon
Lucina
no info
Oguendjo 34⁰ API, 0.67%S, TAN=0.6
16-17950Perenco (i)Glencore
UnipecChina
28-29950Perenco (i)Glencore
UnipecChina
Dussafu
no info
Ghana
Jubilee 36.75° API, 0.29%S, TAN=0.05
20-21950Kosmos
TrafiguraP66USEC
27-28950TullowGlencore
P66USEC
Sankofa 28° API, 030%S, TAN=0.08
18-19950EniRepsolSpain
Ten 33.0° API, 0.43% S, TAN=0.05
31-01950TullowP66USEC

Christina Katsouris, London