July 28, 2022

WWW.ENERGYINTEL.COM

West Africa: Sellers Make Hay Before Sun Goes Down


  • Angola clears all August loadings with September off to a strong start


  • Chinese buyers pay big premiums and face uncertain demand at home


  • Softer tone on Nigeria as US flows increase and Libyan exports resume

Sellers of West African crude are still riding the wave of record differentials, but a sense of foreboding has set in amid signs that high prices are softening fuel consumption and strengthening crude supply. “The market is still very strong, but people are wondering how long that might last,” said one seller. As of Wednesday, Angola had cleared all August cargoes and had just 15 spot September loading cargoes to sell. Nigeria, which trades over a longer cycle, had cleared all but a handful of August loaders and very little September fare.

Angolan trade got off to a strong start when Sonangol sold two cargoes of September-loading Girassol for more than dated Brent plus $8/bbl, one of them reportedly to Exxon Mobil. Chinese traders have also taken a few spot cargoes on top of their usual 11 or so term commitments, but not as much as thought given muted expectations of a recovery in Chinese demand. “Everyone keeps saying China is coming back,” said one Chinese trader, but there are still fears that Covid-19 lockdowns and mass testing that has cramped trade in key cities in recent months could return.


Estimated West African Exports, June 2022
('000 b/d)Vol.
Angola1,121
Cameroon59
Chad127
Congo (Brazzaville)246
Congo (Kinshasa)30
Cote d'Ivoire13
Equatorial Guinea67
Ghana127
Gabon185
Nigeria*1,175

Flow to China

China, which generally takes 60% to 80% of Angola’s crude, notched a 2% pick up in month-on-month oil demand in June to 13.34 million b/d, which is still down 9% on the year, Energy Intelligence data show. But buying West African crude is tough for Chinese refiners. “The dated (Brent market) structure and arbitrage economics are not in favor of the long-haul buyer,” conceded one Angolan seller, pointing out that refiners must pay a huge premium for prompt delivery of Atlantic Basin crude and that hedging is expensive. Theoretically, this keeps the arbitrage for West African oil to Asia closed. Supply contracts keep much of the oil flowing.

On Thursday, the Brent September futures contract premium over October loadings was $5/bbl in turbulent trade ahead of the Jul. 29 expiration of the September contract. The October premium over November was $2.50/bbl. And physical dated Brent — a cargo with a loading date — was priced more than $3/bbl over the September front-month contract. The Brent Dubai Exchange of Futures for Swaps remains wide, and rising freight costs are compounding the problem. The cost of a very large crude carrier from West Africa to China has risen to $3/bbl, up from $2.30/bbl last month.

Chinese traders claim they are focusing on procuring feedstock in Asia. Some are buying more products from the independent teapot refiners within China which have been left long on product because of government export restrictions. “That means the Chinese majors are buying less crude” for their own refineries, one Chinese trader said.

Angolan sellers persist with trying to make hay while the sun is still shining. They have been offering Cabinda at dated Brent plus $9/bbl, Clov and Girassol at dated plus $8/bbl — way above the assessments of price reporting firms which put Cabinda at dated Brent plus $5/bbl and Girassol at dated plus $7.70/bbl.

Estimated West African Exports to Asia, June 2022
('000 b/d)NigeriaAngolaOtherTotal
China0602313915
India1276532224
Taiwan0323264
Indonesia158330191
Japan0000
Other*650126191
Total3507325031,585

Force Majeure Continues

The trade in Nigerian crude has been slow, partly because term customers were waiting for August Official Selling prices, and also because Nigerian National Petroleum Corp (NNPC) has been slow to release the September programs amid ongoing problems at several terminals. The Bonny Light crude system across the eastern Niger Delta, which has been ransacked by oil thieves, remains under force majeure. The normally prolific Forcados system in the west has also suffered theft and technical problems, which reduced exports to just 3.5 cargoes in June — around half the usual levels.

Nigerian sellers, who offered Qua Iboe at dated Brent plus $10/bbl on Monday, dropped the offer on Tuesday to dated plus $9/bbl. The key question is whether this new shift will continue. One trader noted a “softer tone” on Nigeria. For one, supplies of rival light sweet crudes are rising. Brent’s near $10 premium over US benchmark West Texas Intermediate is sucking an armada of US crude toward Europe, which is Nigeria’s most important market. Libyan export terminals are also reopening and boosting exports, which is adding to softer differentials on other rival grades like Azeri Light.

Indian refiners who switched to Russian fare to cash in on cheaper prices, have returned to the Nigerian market, although actual volumes are tricky to gauge. Indonesia’s Pertamina, which has stepped up buying in recent months, has maintained its higher pace.

NNPC hiked the official selling price of August loading Escravos by $2.59/bbl to dated Brent plus $9.43/bbl. It also boosted Forcados by $1.65/bbl to dated plus $8.38/bbl and Qua Iboe by $1.69/bbl to plus $7.49/bbl. These levels are substantially below the assessments of price reporting firms, which assessed Escravos at dated Brent plus $12.50 /bbl to $12.65/bbl over the past three weeks, and Forcados at Dated plus $10/bbl.

Estimated West African Exports to Asia, June 2022
('000 b/d)NigeriaAngolaOtherTotal
China0602313915
India1276532224
Taiwan0323264
Indonesia158330191
Japan0000
Other*650126191
Total3507325031,585

Market Jitters

Complicating West African crude sales is the volatile oil price. Brent traded over $120/bbl in June and below $95/bbl in July before recovering to $107/bbl on Thursday. The fluctuations reflect swiftly changing market sentiment. The hike followed Saudi Arabia’s refusal to boost output during US President Joe Biden’s visit to the kingdom, and the path down showed assumptions over the loss of fuel demand from high prices and worries over sinking consumer confidence, inflation and fears of recession.

After significant tightness, the global oil market is heading towards a surplus for 2022 — although analysts differ on the size. Energy Intelligence estimates the surplus at 350,000 b/d over the year, while the IEA suggests a build of 900,000 b/d. Showing some signs of normalization, the crash in especially global gasoline prices in recent weeks has dented refiners' profits. “People are still getting a good return, but gasoline and gasoil cracks have shrunk,” one trader said.

Estimated Nigerian Loadings, June 2022
DateVol. ('000 bbl)SellerBuyerDest.
Abo 38.8° API, 0.14%S, TAN=0.98
7-8600EniCepsaSpain
Agbami 48.28° API, 0.04%S, TAN=0.05
7-8975EquinorAmpolAustralia
16-17975ChevronTotal
IOC†India
24-25975ChevronBPRotterdam
Akpo
12-131,000CNOOCEquinor
BPRotterdam
25-261,000TotalIOC†India
Amenam 39.4° API, 0.1%S, TAN=0.30
2-3950Total‡ France
21-22950TotalRepsolPeru
Antan 28° API, 0.3%S, TAN=0.34
no cargoes
Anyala Madu
9-10650NNPC-VitolDeltaUSEC
25-26650NNPC-Mercuria USEC
Bonga 29.39° API, 0.25%S, TAN=0.46
1-2950SaharaShell
Cepsa
Chevron
PreemSweden
4-5950NNPC-BonoP66
Vitol
PreemSweden
17-18950NNPC-MRSTotal
PreemSweden
Bonny Light 35.09° API, 0.15%S, TAN=0.25
no info
Brass River 40.1° API, 0.18%S, TAN=0.13
350Oando-Vitol Saldanha Bay
950NNPC-traderSaprefDurban
EA 35° API, 0.09%S, TAN=0.13
25-26950ShellStatoil
IneosEurope
Egina 27.3° API, 0.165%S, TAN=0.24
2-3950CNOOCIrvingCanada
9-10950TotalPertaminaIndonesia
16-17950NNPC
23-24950TotalIrving Canada
Erha 35.4° API, 0.18%S, TAN=0.13
30-01950ShellIneos
Sahara
SARSenegal
16-18950NNPC-SaharaShellUSEC
Escravos 32.4⁰ API, 0.17%S, TAN=0.56
6-7950NNPC-SaharaRepsolSpain
14-15950ChevronPertaminaIndonesia
21-22950NNPC-SaharaChevron
IOCIndia
29-30950NNPC-MercuriaPetrogal
Glencore
PertaminaIndonesia
Forcados 31.5⁰ API, 0.22%S, TAN=0.33
4-5975Seplat NW Europe
10-11950NPDC-trader France
950 TuprasTurkey
28-29540SeplatCepsaSpain
Jones Creek 30.01° API, 0.35%S
19-20950NNPC-GlencorePetrobrasBrazil
Okono 40.6⁰ API, 0.07%S, TAN=0.2
no info
Okoro
no info
Okwuibome 35.39° API, 0.02
7-8950VitolPertaminaIndonesia
Pennington
25-30950Chevron
Qua Iboe 37.6° API, 0.11%S,TAN=0.33
6-7950ExxonPertaminaIndonesia
12-13950Exxon Malaysia
21-22950NNPC-LevineBP
CepsaSpain
29-30950NNPC-OandoExxon
CepsaSpain
Usan 29⁰ API, 0.27%S, TAN=1.53
22-23950NNPC-OandoTotal
IOCIndia
Yoho 40.5° API, 0.06%S, TAN=0.23
24-25950TotalMarcus HookUSEC

Estimated Angolan Loadings, June 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cabinda 32.2° API, 0.15%S, TAN=0.11
2-3950SonangolCPCTaiwan
11-12950ChevronUnipecChina
24-25950ChevronValeroCanada
Clov 33.17° API, 0.25%S, TAN=0.54
5-61,000Total‡ Europe
14-151,000EquinorIOCIndia
23-241,000Total Exxon
PetrogalPortugal
Dalia 23.4⁰ API, 0.49%S, TAN=1.54
31-01950SonangolUnpec (t)China
8-9950SonangolVitol
CNOOCChina
17-18950ExxonSarasEurope
25-26950SonangolSinochem (t)China
Gimboa 25.3° API, 0.56%S, TAN=0.65
no cargoes
Gindungo 32° API, 0.58% S, TAN=0.54
>1-2950TotalSinochemChina
27-28950SonangolSinochem (t)China
Girassol 30.21° API, 0.34%S, TAN=0.39
5-61,000SonangolSinochem (t)China
17-181,000SonangolGlencore
Exxon
Chevron
PertaminaIndonesia
28-291,000SonangolUnipec (t)
Exxon
P66USEC
Hungo 29.4° API, 0.59%S, TAN=0.46
11-12950SonangolIOCIndia
Kissanje 30.3° API, 0.36%S, TAN=0.51
1-2950SonangolSinochem (t)China
22-23950BPUnipecChina
Mondo 27.5° API, 0.438%S, TAN=0.922
18-19950EniUnipec China
Mostarda 28° API, 1.12%S, TAN=0.53
7-8950SonangolSinochem (t)China
15-16950GalpUnipec
ExxonEurope
23-24950TotalSinochemChina
<
Nemba 37° API, 0.276%S, TAN=0.24
>13-14950SonangolSinochem (t)China
25-26950TotalUnipecChina
Olombendo 35.2° API, 0.12%S, TAN=0.11
1-2950Eni‡ Italy
14-15950Repsol Spain
Palanca 37.2° API, 0.18%S TAN=0.03
no cargoes
Pazflor 24.7° API, 0.4%S,TAN=1.63
2-3950BPVitolFujaira
16-17950TotalUnipec
CNOOCChina
27-28950SonangolSinochem (t)
ExxonEurope
Plutonio 33.2° API, 0.37%S, TAN=0.12
12-131,000BP‡ Spain
24-251,000SonangolP66USEC
Sangos 31⁰ API, 0.6%S, TAN=0.29
15-16950EniUnipecChina
Saturno 27.6° API, 0.8%S, TAN=0.53
6-7950SonangolUnipecChina
22-23950SonangolUnipecChina
Saxi-Batuque 34.6° API, 0.25%S, TAN=0.59
21-22950EquinorExxonChina
Estimated Other West African Loadings, June 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cameroon
Kole 32.06° API, 0.33%S, TAN=0.5
16-17950SNHExxonFrance
Lokele
2-3700PerencoTamoilSardinia
Chad
Doba 25.85° API, 0.09%S, TAN=2.23
3950GlencoreShellWilhelmshaven
11950CNPCSenning†Singapore
950CNPCPetroineos
Exxon
950OPICCPCTaiwan
Congo (Brazzaville)
Djeno 27.6° API, 0.341%S, TAN=0.69
2-3920GlencoreUnipecChina
7-8920SNPCBB EnergyUnipec
12-13920TotalChevronUnipec
17-18920SNPCUnipecChina
21-22920ChevronTotal
IOCIndia
26-27920PerencoUnipecChina
30-01920EniPTTThailand
Nkossa 39.92° API, 0.06%S, TAN=0.05
19-20950EniValeroPembroke
Congo (Kinshasa)
Coco
13-14900PerencoBP
VitolAsia
Cote d'Ivoire
Baobab
no info
Espoir
8-9400CNRVitol
VaroEurope
Yombo
no info
Equatorial Guinea
Aseng
no info
New Zafiro 30.2° API, 0.25%S, TAN=0.74
10-111,000GEPetrolAramco
Exxon
GalpSines
Ceiba
18-191,000KTEGIBP
CNOOCChina
Gabon
Rabi Light 33.2° API, 0.14%S, TAN=0.08
16-17950PerencoGlencore
UnipecChina
Rabi Blend 34.10° API, 0.06%S
16-17950AssalaShell
UnipecChina
21-22950AssalaShell
HengyuanChina
28-29650GOC-VitolORLIsrael
Mandji
17-18900PerencoGlencore
SarasEurope
Etame 35.21⁰ API, 0.06%S, TAN=0.2
27-29500VaalcoExxon
SarasEurope
Lucina
no info
Oguendjo 34⁰ API, 0.67%S, TAN=0.6
Senning†Singapore
Dussafu
2-3650GOCVitol
PetrogalPortugal
Ghana
Jubilee 36.75° API, 0.29%S, TAN=0.05
8-9950GNPCUnipecChina
20-21950KosmosGlencore
BP
ValeroCanada
30-01950TullowP66USEC
Sankofa 28° API, 030%S, TAN=0.08
15-16950VitolChevron
MarathonUSWC
Ten 33.0° API, 0.43% S, TAN=0.05
no cargoes

Christina Katsouris, London