December 22, 2022

WWW.ENERGYINTEL.COM

West African Crude Trade Slows Ahead of Christmas

  • Weak refining margins are cramping European demand for light sweet crude from Nigeria and Angola.
  • Trading economics have improved for long haul West African cargoes to Asia, but Covid-19 cases throw doubt on the sustainability of a recovery.
  • Nigerian National Petroleum Corp. cut official selling prices to clear January overhang, but the impact has been minimal so far.

The West African crude market faces mixed portents ahead of February trade. On the one hand, an uptick in Chinese buying, weaker differentials and favorable long-haul economics buoyed expectations of a recovery in Asian demand. On the other, European demand is flagging, and in China any recovery would appear to be fragile amid rising Covid-19 cases and broader concerns about economic recession.

February programs were released into a slow market, with many traders reporting a quiet period in the run-up to Christmas. As of Dec. 22, Nigeria had an overhang of at least a dozen January loading cargoes, alongside a handful of Angola's. Sonangol was still allocating February term cargoes, and Angola had yet to move any spot cargoes.

Estimated West African Exports, November 2022
('000 b/d)Vol.
Angola1,022
Cameroon57
Chad95
Congo (Brazzaville)246
Congo (Kinshasa)30
Cote d'Ivoire--
Equatorial Guinea88
Ghana127
Gabon175
Nigeria*1,245

Dashed Hopes

Hopes that the West Africa market, in the doldrums last month, would recovery were fueled in early December by a flurry of January cargo buying and a relaxation of China's restrictions aimed at containing Covid-19, Angola’s biggest customer.

But some played down the flurry as a temporary combination of factors. “The market (structure) flipped to contango, freight collapsed, and differentials on some grades were weak” — all within a short period, said one Chinese buyer. Contango is a price structure that incentivizes storing crude and selling later.

It is unclear whether this bearish price structure will last. The market remains volatile, having flipped between contango and backwardation by 5¢-10¢ either side of the flat price all week.

Refiners in Europe, which loaded 1.1 million b/d of West African crude in November (see tables), or 300,000 b/d more year on year, are feeling the pinch from weaker refining margins. They see fading demand for naphtha-rich light, sweet crudes from Nigeria, though appetite for middle distillate grades like Egina is holding up. At the same time competition from shorter-haul Mediterranean fare remains intense.

Asia Waits

Slow European buying could encourage traders in Asia, the key market for Angolan and other West African fare, to sit back at a time when they should be exploiting better arbitrage opportunities. The Brent-Dubai exchange of futures for swaps has narrowed to less than $5 per barrel, making Brent-linked West African grades more competitive in Asia relative to Dubai-linked Mideast and regional grades. Freight costs on a VLCC from West Africa to China have fallen 30% since November.

Indian buying remains patchy, with Indian Oil (IOC) the only consistent local tenderer for West African crude. Spot-buyer Reliance has been absent. IOC awarded a cargo of February loading Cameroonian Kole to Vitol and a Djeno from TotalEnergies this week.

That said, IOC has cut back on Nigerian barrels in favor of other regional grades. It increased purchases of Angolan fare five-fold on year earlier levels to 160,000 b/d in November — thereby continuing to take some of the slack left by China, Angola’s largest customer.

China is keeping the market guessing. The country revved up crude runs by 700,000 b/d to 14.57 million b/d last month — the highest level in a year. So while domestic demand for products remains subdued, China’s exports of oil products have soared. The new Shenhong Petrochemicals (320,000 b/d) in Jiangsu and Petrochina’s 400,000 b/d Jieyang complex in Guandong helped to boost imports this quarter and are expected to increase further in 2023 fully on stream.

The lifting of zero-Covid-19 restrictions was expected to boost demand. However, an earlier-than-expected reopening from lockdowns could yet backfire and prompt more restrictions. Infections are doubling every few days in some places, and fears of going out and traveling are cramping domestic demand for transport fuels.

West African Exports to Asia, November 2022
('000 b/d)NigeriaAngolaOtherTotal
China0510262772
India12816031319
Taiwan003232
Indonesia1273262221
Japan0000
Other*330033
Total2887023871,377

Nigerian Progress

On the supply side, Nigeria has yet to disclose the full February program but generally appears set to produce more oil. This follows the reopening of the Bonny system in November and invigorated attempts to crack down on crude theft by using a former embezzler, Government Ekpemupolo, to catch the criminals.

Thus far only one cargo — loaded by Aiteo — has sailed from the Bonny terminal. Producers are trying to clear a backlog of several cargoes delayed from September and October 2021. The trans-Niger pipeline feeding the terminal is open, and the Nembe Creek Trunkline is expected to reopen soon, sources say. Loadings from the Forcados terminal, which was shut in August-November, have also risen and are averaging over 180,000 b/d.

Nigerian National Petroleum Corp slashed official selling prices in a bid to clear the January overhang, though traders say the impact has been muted. NNPC lopped $1.57/bbl off Escravos, to dated Brent plus $1.1/bbl, and 81¢/bbl off Bonny and Forcados to dated minus 50¢/bbl and minus 92¢/bbl respectively. It also cut $1.07/bbl off Qua Iboe, to dated Brent plus 55¢/bbl.

For its part, Angola appears set to export around 1.05 million b/d in February.

Estimated Nigerian Loadings, November 2022
DateVol. ('000 bbl)SellerBuyerDest.
Abo 38.8° API, 0.14%S, TAN=0.98
24-25600EniCepsaSpain
Agbami 48.28° API, 0.04%S, TAN=0.05
10-11975ChevronPetrobrasBrazil
20-21975ChevronIOCIndia
22-23975NNPC-Bono
Akpo
6-71,000PrimeShell
IRPCThailand
18-191,000CNOOCPetrobrasBrazil
Amenam 39.4° API, 0.1%S, TAN=0.30
1-2950 MonroeUSEC
9-10950TotalSasolS. Africa
19-20950NNPC-EyrieCepsaEurope
Antan 28° API, 0.3%S, TAN=0.34
23-24950NNPC-BP‡ Europe
Anyala Madu
11-12650Oando-VitolShellUSEC
27-28650Oando-VitolShellEurope
Bonga 29.39° API, 0.25%S, TAN=0.46
19-20950NNPC-OandoVitol
ExxonRotterdam
26-27950NNPC-MRSMercuriaTrieste
Bonny Light 35.09° API, 0.15%S, TAN=0.25
< Shell
24-25950Aiteo Durban
< Shell
Brass River 40.1° API, 0.18%S, TAN=0.13
No info
EA 35° API, 0.09%S, TAN=0.13
15-16950NNPC-VitolCressierSwitzerland
Egina 27.3° API, 0.165%S, TAN=0.24
1-4950Prime 130Shell
GalpPortugal
12-13950NNPC-SaharaMercuria
SIRAbidjan
20-21950TotalPertaminaIndonesia
Erha 35.4° API, 0.18%S, TAN=0.13
9-10950NNPC-SaharaShell
Mercuria
Sahara
SARDakar
19-20950Exxon‡ Savona
Escravos 32.4⁰ API, 0.17%S, TAN=0.56
7-8950NNPC-SaharaMercuria
DeltaUSEC
14-15950ChevronRepsolSpain
21-22950NNPC-SaharaGlencore
Shell
CepsaSpain
29-30950ChevronRepsolSpain
Forcados 31.5⁰ API, 0.22%S, TAN=0.33
4-5996Seplat/Total Le Havre
12-13950Shell/Elcrest/FHN Le Havre
17-181,050Shell/indig systemHeideGermany
22-23950NPDCPreemSweden
25-26998Total Le Havre
29-30492NPDCSIRAbidjan
Jones Creek 30.01° API, 0.35%S
No info
Okono 40.6⁰ API, 0.07%S, TAN=0.2
11-12950NNPC-VitolIOCIndia
Okwuibome 35.39° API, 0.02
3-4950VitolPertaminaIndonesia
25-26950VitolPertaminaIndonesia
Qua Iboe 37.6° API, 0.11%S,TAN=0.33
1-2950Exxon‡ NW Europe
9-10950NNPC-AOTPetroineosGrangemouth
^950ExxonIOCIndia
^950NNPC-VitolTamoilEurope
^950NNPC-VitolPertaminaIndonesia
Usan 29⁰ API, 0.27%S, TAN=1.53
17-18950ChevronIOCIndia
Yoho 40.5° API, 0.06%S, TAN=0.23
27-28950NNPC-GlencoreP66USEC
^Date of loading unclear ‡producer's refining system < means deferred to following month. Source: Energy Intelligence
Estimated Angolan Loadings, November 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cabinda 32.2° API, 0.15%S, TAN=0.11
2-3950ChevronUnipecChina
19-20950EniPetrogalPortugal
Clov 33.17° API, 0.25%S, TAN=0.54
4-51,000BPMubadalaBrazil
14-151,000TotalIOCBrazil
24-251,000TotalMubadalaBrazil
Dalia 23.4⁰ API, 0.49%S, TAN=1.54
8-9950SonangolSinochem (t)
SarasEurope
16-17950BPUnipecChina
24-25950SonangolRepsolSpain
Gimboa 25.3° API, 0.56%S, TAN=0.65
No info
Gindungo 32° API, 0.58% S, TAN=0.54
25-26950ExxonTotal
Sonangol
UnipecChina
Girassol 30.21° API, 0.34%S, TAN=0.39
11-121,000SonangolExxon
25-261,000TotalMCBrazil
Hungo 29.4° API, 0.59%S, TAN=0.46
3-4950SonangolIOCIndia
Kissanje 30.3° API, 0.36%S, TAN=0.51
7-8950SonangolSinochem (t)China
24-25950ExxonIOCIndia
Mondo 27.5° API, 0.438%S, TAN=0.922
No cargoes
Mostarda 28° API, 1.12%S, TAN=0.53
1-2950SSI-Unipec China
9-10950TotalSonangol
UnipecChina
17-18950SonangolSinochem (t)China
24-25950SSI-Unipec China
Nemba 37° API, 0.276%S, TAN=0.24
5-6950ChevronIOCIndia
13-14950EniIOCIndia
21-22950SonangolSinochem (t)China
28-29950Total Inpex
UnipecChina
Olombendo 35.2° API, 0.12%S, TAN=0.11
10-11950EniPertaminaIndonesia
20-21300Sonangol Lobito
Palanca 37.2° API, 0.18%S TAN=0.03
25-26985SomoilUnipecChina
Pazflor 24.7° API, 0.4%S,TAN=1.63
6-7950EquinorUnipecJingbo
18-19950TotalExxon
29-30950BPRepsolSpain
Plutonio 33.2° API, 0.37%S, TAN=0.12
7-81,000SonangolSinochem (t)China
21-221,000SonangolIOCIndia
Sangos 31⁰ API, 0.6%S, TAN=0.29
5-6950EniUnipec
CNOOCChina
21-22950EniSinochem
ChemchinaChina
Saturno 27.6° API, 0.8%S, TAN=0.53
8-9950SSIUnipecChina
19-20950BPUnipecChina
Saxi-Batuque 34.6° API, 0.25%S, TAN=0.59
9-10650SonangolExxonSavona
Estimated Other West African Loadings, November 2022
DateVol. ('000 bbl)SellerBuyerDest.
Cameroon
Kole 32.06° API, 0.33%S, TAN=0.5
10-11950SNHShellEurope
Lokele
26-27770PerencoSarasSicily
Chad
Doba 25.85° API, 0.09%S, TAN=2.23
7-8950CNPCSenning
VitolFujaira
15-16950CNPCGlencoreEurope
23-24950CNPCSenning
CPCTaiwan
Congo (Brazzaville)
Djeno 27.6° API, 0.341%S, TAN=0.69
2-3920TotalEquinor
teapotDongjiakou
6-7920ChevronUniipecChina
11-12920PerencoUnipecChina
16-17920TotalIOCIndia
20-21920TotalUnipecChina
25-26920SNPC-TrafiguraUnipecChina
29-30920ChevronUnipecChina
Nkossa 39.92° API, 0.06%S, TAN=0.05
17-18950EniGalpPortugal
Congo (Kinshasa)
Coco
13-17900PerencoBP
PertaminaIndonesia
Cote d'Ivoire
Baobab
20-211,000CNR or PetrociValeroPembroke
Espoir
no info
Equatorial Guinea
Aseng
30-01650NobleGlencore
SarasEurope
New Zafiro 30.2° API, 0.25%S, TAN=0.74
15-161,000GEPetrolZhen Hua
PetrogalPortugal
Ceiba
19-201,000KTEGIBPCastellon
Gabon
Rabi Light 33.2° API, 0.14%S, TAN=0.08
15-16950TullowCNOOC
UnipecChina
22-23450GOCVitolRotterdam
28-29950Maurel & PromGlencore
PertaminaIndonesia
Rabi Blend 34.10° API, 0.06%S
29-30750AssalaShell
Mandji
6-7450TotalVitol
UnipecChina
15-16450GOCVitol
SarasEurope
24-25450GOCVitolRotterdam
Etame 35.21⁰ API, 0.06%S, TAN=0.2
25-26450GOCVitol
Lucina
19-20350PerencoExxon
Oguendjo 34⁰ API, 0.67%S, TAN=0.6
No info
Ghana
Jubilee 36.75° API, 0.29%S, TAN=0.05
8-9950JOHLBB Energy
P66USEC
19-20950KosmosTrafigura
ShellRotterdam
Sankofa 28° API, 030%S, TAN=0.08
13-14950VitolValeroPembroke
Ten 33.0° API, 0.43% S, TAN=0.05
4-5950JOHLBB Energy
UnipecChina

Christina Katsouris, London