Nigeria loses N88bn as India, US reduce oil imports

The Dollar Business Bureau

The US and India have drastically reduced their crude oil imports from Nigeria by 53% and 43%. This has translated to a loss of N88bn for the African state as revealed in the latest report by the Nigerian National Petroleum Corporation.

Nigeria had replaced Saudi Arabia in the race to supply crude oil to India last year. This was a major setback to the Middle East kingdom, which lost its top spot to the African country.

India which became the single largest buyer of Nigerian crude in 2013, reduced its imports in May as it bought 7.74 million barrels, showing a reduction from 13.51 million barrels bought in April, 12.51 million barrels in March and 12.70 million barrels in Feb.

Reports suggest this could be due to the rising uncertainties existing in the country with regard to meeting deliveries. A spate of bombings and the blowing up of crude oil pipeline of the Chevron Nigeria Ltd by militants was considered to be one of the reasons.

Many major oil companies in Nigeria including ExxonMobil have declared force majeure of crude oil export while few others were forced to suspend or cut production as a result of the attacks on oil facilities in the country.

The other reason for the reduction of oil imports by India could be its shift in re-doing deals with major oil supplying countries, taking advantage of  the consumer demand situation. Earlier this year in January the Minister of State (Independent charge) Dharmendra Pradhan had said as India is now one of the top oil importers in the world, it needs to take advantage of its buying clout. And the government using this clout had successfully negotiated its contracts with major oil countries including Nigeria for a term contract.

India had in January imported 16.29 million barrels of Nigerian crude, its highest monthly level, while the US whose imports of Nigerian crude rose by 577.8 percent in the first quarter this year compared to the same period of 2015, reduced its import by 5.77 million barrels in May from 10.13 million barrels in the previous month. In February America had purchased 12.12 million barrels from Nigeria making it the second largest buyer of crude after India.

The decrease of 11.14 million barrels from US and India put together amounted to a massive loss of N87.9 bn for Nigeria. This is after taking into consideration the price to be $40/barrel with the official exchange rate being N197/$ in the month of May.