September 29, 2022

WWW.ENERGYINTEL.COM

West African Sellers Hope Low Price Will Lend Support


  • Nigeria's national oil company is slashing selling prices to reduce an October overhang and stimulate purchases of November cargoes.
  • Angola hopes a low flat price and a less backwardated curve will help restore sales to China to former levels.
  • Rising freight costs are a growing concern for West African exporters.

Sellers of West African crude are reporting a difficult start for November-loading spot cargoes since high freight costs and steep backwardation in the Brent price curve have rendered West African fare uncompetitive in Asia and Europe in recent weeks.

However, a lower flat price could spur more Chinese buying, and softer differentials could boost the appeal of West Africa's distillate rich grades at a time when diesel is ruling the market.

Estimated West African Exports, August 2022
('000 b/d)Vol.
Angola1,085
Cameroon52
Chad123
Congo (Brazzaville)239
Congo (Kinshasa)26
Cote d'Ivoire40
Equatorial Guinea65
Ghana123
Gabon181
Nigeria*1,128

Nigerian Overhang

As of Sep. 27, Nigeria had an overhang of 12-15 October-loading cargoes. Lackluster interest in November fare is compounding the backlog. Angola has traded only a handful of November spot cargoes despite having cleared all but one cargo from the October program.

The global market has taken a bearing. Rising interest rates and a strong US dollar are spooking traders with the specter of a sustained recession. This has helped depress benchmarks, which declined for four consecutive weeks to hit their lowest levels since early January.

Asian traders say that Chinese refiners, which are extremely sensitive to flat prices, will hike buying to capitalize on current low benchmarks. Talk of new export quotas for independent refiners could also help.

The key question is whether they will pick up more Angolan fare. While China’s apparent oil demand is recovering from earlier pandemic-related shutdowns it has been buying more spot cargoes from other regions — notably Russia and the Mideast.

Estimated West African Exports to Asia, August 2022
('000 b/d)NigeriaAngolaOtherTotal
China0584211795
India95610156
Taiwan0313162
Indonesia1553119205
Japan0000
Other*62610123
Total3127682611,341

Pushed From China

Europe’s scramble for non-Russian barrels has sucked Angolan crude west at higher prices. Even Chinese term lifters are choosing to optimize by selling some of their term cargoes to Europe.

Angola’s exports to China have fallen to around 55% of total loadings in the last few months — tallying just 584,000 barrels per day in August and 524,000 b/d in July. That’s down from around 70% in the final quarter of 2021.

This trend was driven in part by freight costs and part market structure. “With a [very large crude carrier] to China costing $5 per barrel (up from $3.75/bbl last month) and backwardation at close to $1.50 a month, it already costs around $6.50/bbl just to get there," quipped one Chinese trader.

That said, the curve is getting flatter, and the spread between Brent, to which West African crudes are linked, and Dubai, the benchmark for rival Mideast crudes, is narrowing. The Brent Dubai Exchange of Futures for Swaps came in to $4.60/bbl at the weekend after having been above $6.50/bbl for most of August.

The influx of Angolan and other West African crude to Europe — alongside flows of US West Texas Intermediate (WTI) and Brazilian crude — has crowded Nigerian fare out of a core hub.

Competition in India

Complicating matters, India, Nigeria’s most important market, has been buying slightly less Nigerian than usual, traders say. Indian Oil Corp. (IOC) bypassed West African crude altogether in its latest tender when taking 2 million barrels of US WTI instead.

On Sep. 21, IOC awarded a cargo each of Congolese Djeno and Angolan Pazflor and Clov to TotalEnergies, while taking only one cargo of Nigerian Usan from Chevron. It had previously bought a cargo of Djeno from Eni and a cargo of Angolan Nemba each from Eni and Chevron.

Unreliable and overpriced, Nigerian crude has lost its appeal in recent months. Exports of crude and condensates sank to 1.18 million b/d in August, down from 1.4 million b/d in June and 1.68 million b/d in January, according to government data. Theft has driven output of Bonny to less than 30,000 b/d from around 130,000 b/d in January, while technical problems and other factors have driven Forcados below 30,000 b/d in recent months from 270,000 b/d in January.

Nigerian National Petroleum Corp. (NNPC) tried to get some traction at the weekend when it slashed official selling prices (OSPs) to clear the overhang of October cargoes. NNPC lopped $4.92/bbl and $5.16/bbl off Escravos and Forcados to price the grades at dated Brent plus $4.14/bbl and $2.98/bbl, respectively. It also cut $4.38/bbl off Qua Iboe, the other main flagship grade, to price it at dated plus $3.2/bbl.

But this amounted to a correction as NNPC had failed to reduce OSPs sufficiently in September. NNPC sets the OSPs retrospectively at the end of the selling month, supposedly to reflect the levels at which crude traded. NNPC's term lifters, who would have paid NNPC more for the September cargoes than the price at which they sold them, would have looked for a steep cut in OSPs in October to compensate for their losses.

Estimated Nigerian Loadings, August 2022
DateVol. ('000 bbl)SellerBuyerDest.
Abo 38.8° API, 0.14%S, TAN=0.98
No info
Agbami 48.28° API, 0.04%S, TAN=0.05
7-8975ChevronBP
TotalDonges
16-17975ChevronHyundaiS. Korea
25-26975EquinorIOCIndia
Akpo
3-41,000CNOOCExxon
IOCIndia
17-181,000PrimeShell
BPNW Europe
Amenam 39.4° API, 0.1%S, TAN=0.30
13-14950NNPC-ATCCepsaSpain
27-28950NNPC-LeveneEquinor
TotalDonges
Antan 28° API, 0.3%S, TAN=0.34
2-3950NNPC-BPGalpPortugal
Anyala Madu
11-12650NNPC-SaharaSIRC'Ivoire
27-28650First E&P/VitolVaroEurope
Bonga 29.39° API, 0.25%S, TAN=0.46
>12-13950NNPC-MocohGlencore
PreemSweden
22-23950NNPC-MercuriaCepsa
Shell
SIRC'Ivoire
>29-30950ExxonShell
CepsaSpain
Bonny Light 35.09° API, 0.15%S, TAN=0.25
No info
Brass River 40.1° API, 0.18%S, TAN=0.13
23-24950NNPC-BPNo info
27-28950NNPC-SaharaNo info
EA 35° API, 0.09%S, TAN=0.13
no info
Egina 27.3° API, 0.165%S, TAN=0.24
7-81,000TotalPertaminaIndonesia
14-151,000NNPC-DukeBono
Total
ORLIsrael
22-231,000Total‡ Europe
< CNOOCVitol
ORLIsrael
Erha 35.4° API, 0.18%S, TAN=0.13
>8-9950ExxonVitol
IOCIndia
Escravos 32.4⁰ API, 0.17%S, TAN=0.56
3-4950ChevronSK EnergyS. Korea
12-13950NNPC-BonoP66
BP
SasolS. Africa
18-19950NNPC-MRSChevron
HyundaiS. Korea
20-21950NNPC-MocohCepsaSpain
30-31950NNPC-MercuriaPertamina†Indonesia
Forcados 31.5⁰ API, 0.22%S, TAN=0.33
No info
Jones Creek 30.01° API, 0.35%S
10-11997NNPC-LevenePetroineosUK
Okono 40.6⁰ API, 0.07%S, TAN=0.2
4-5950NNPC-Duke-Vitol† Fos
Okwuibome 35.39° API, 0.02
14-15950VitolPertaminaIndonesia
20-21950VitolPertamina†Indonesia
Qua Iboe 37.6° API, 0.11%S,TAN=0.33
4-5950NNPC-OandoGlencore
EniGenoa
10-11950ExxonDeltaUSEC
16-17950NNPC-GlencoreExxonEurope
22-23950NNPC-SaharaPertaminaIndonesia
28-29950NNPC-PetrocamExxonVado Ligure
Usan 29⁰ API, 0.27%S, TAN=1.53
14-151,000NNPC-VitolIOCIndia
Yoho 40.5° API, 0.06%S, TAN=0.23
>1-2950ExxonDeltaUSEC
29-30950NNPC-BPMercuria
DeltaUSEC

Estimated Angolan Loadings, August 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cabinda 32.2° API, 0.15%S, TAN=0.11
12-13950SonangolRefineryAngola
19-20950Chevron
28-29950Eni PertaminaIndonesia
Clov 33.17° API, 0.25%S, TAN=0.54
5-61,000Total‡DongesFrance
15-161,000BPTotalFrance
24-251,000SonangolSinochem (t)China
Dalia 23.4⁰ API, 0.49%S, TAN=1.54
3-4950SonangolSinochem (t)China
11-12950SonangolVitolRotterdam
19-20950EquinorExxonChina
27-28950SonangolUnipecChina
Gimboa 25.3° API, 0.56%S, TAN=0.65
20-21950Sonangol China
Gindungo 32° API, 0.58% S, TAN=0.54
24-25950SSI-Unipec China
Girassol 30.21° API, 0.34%S, TAN=0.39
11-121,000SonangolP66USEC
22-231,000ExxonPTT Thailand
30-311,000SonangolCPCTaiwan
Hungo 29.4° API, 0.59%S, TAN=0.46
1-2950EniUnipecChina
18-19950Sonangol Sinochem (t)
P66USEC
Kissanje 30.3° API, 0.36%S, TAN=0.51
12-13950SonangolSinochem (t)China
Mondo 27.5° API, 0.438%S, TAN=0.922
1-2950SonangolSinochem (t)China
Mostarda 28° API, 1.12%S, TAN=0.53
17-18950Total China
25-26950ExxonTotal
Sinochem China
Nemba 37° API, 0.276%S, TAN=0.24
7-8950Chevron‡ US
15-16950PetrogalUnipecChina
24-25950SonangolChevron
UnipecChina
Olombendo 35.2° API, 0.12%S, TAN=0.11
8-9950Eni‡ Italy
26-27950SonangolPTT Thailand
Palanca 37.2° API, 0.18%S TAN=0.03
No info
Pazflor 24.7° API, 0.4%S,TAN=1.63
12-13950Exxon† China
22-23950EquinorExxon
UnipecChina
Plutonio 33.2° API, 0.37%S, TAN=0.12
12-131,000SonangolIOCIndia
24-251,000BPP66USEC
Sangos 31⁰ API, 0.6%S, TAN=0.29
22-23950EniUnipecChina
29-30950SonangolIOCIndia
Saturno 27.6° API, 0.8%S, TAN=0.53
1-2950SSI-Unipec China
15-16950SonangolUnipec (t)China
Saxi-Batuque 34.6° API, 0.25%S, TAN=0.59
28-29950SonangolSinochem (t)China

Estimated Other West African Loadings, August 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cameroon
Kole 32.06° API, 0.33%S, TAN=0.5
16-17950PerencoShellEurope
Lokele
13-14650Addax-UnipecPetroineosEurope
Chad
Doba 25.85° API, 0.09%S, TAN=2.23
1-2950SHT-GlencoreShellWilhelmshafen
8-9950CNPCUnipec
CPCTaiwan
16-17950CNPCPetroChina
ShellWilhelmshafen
22-23950CNPC-Petroineos Rotterdam
Congo (Brazzaville)
Djeno 27.6° API, 0.341%S, TAN=0.69
4-5920SNPC-MercuriaMubadala
PetrobrasBrazil
8-9920SNPC-Unipec China
13-14920TotalMubadala
PetrobrasBrazil
18-19920ChevronUnipecChina
22-23920SNPC-BB EnergyUnipecChina
27-28920SNPCPetroineos
UnipecChina
Nkossa 39.92° API, 0.06%S, TAN=0.05
7-8950EniGalpPortugal
28-29950SNPC-TrafiguraP66USEC
Congo (Kinshasa)
Coco
1-2800Perenco-BPORLIsrael
Cote d'Ivoire
Baobab
27-28900 Fujaira
Espoir
10-20350 Vitol
Equatorial Guinea
Aseng
No cargoes
New Zafiro 30.2° API, 0.25%S, TAN=0.74
14-151,000GePetrolSinochem
RepsolSpain
Ceiba
17-181,000TridentBPRotterdam
Gabon
Rabi Light 33.2° API, 0.14%S, TAN=0.08
950Maurel & PromUnipecChina
950PerencoShell
TamoilItaly
Rabi Blend 34.10° API, 0.06%S
12-13950AssalaShell
UnipecChina
26-27650GOC-VitolORLIsrael
Mandji
10-11450PerencoGlencore
19-20450PerencoGlencore
Etame 35.21⁰ API, 0.06%S, TAN=0.2
24-25600VaalcoGlencore
PertaminaIndonesia
Lucina
No info
Oguendjo 34⁰ API, 0.67%S, TAN=0.6
No cargoes
Dussafu
5-10600BW-BPORLIsrael
Ghana
Jubilee 36.75° API, 0.29%S, TAN=0.05
12-13950TullowShell
ChevronUSWC
23-24950KosmosTrafigura
UnipecChina
Sankofa 28° API, 030%S, TAN=0.08
12-13950VitolExxonMed
Ten 33.0° API, 0.43% S, TAN=0.05
19-20950Tullow Shell
ChevronUSWC

Christina Katsouris, London