Yemisi Izuora
India is now a major buyer of crude oil from Nigeria and other West African countries.
The country’s appetite for West African (WAF) crude has surged in recent months as one of the world’s biggest consumers of oil looks to shift its focus away from the Middle East.
India imported 2.45 million metric tons (MT) of crude oil in May from Nigeria, up 34.64 percent year-on-year and a near five-fold jump from April, according to shipping data obtained by Platts.
India is the largest buyer of Nigerian crude, which is largely light and sweet, and fits the appetite of the Indian state refineries.
Indian state-owned refiners like Indian Oil Corp., Bharat Petroleum Corp. Limited and Hindustan Petroleum Corp. Limited, and private refiner Reliance are all key and consistent buyers of Nigerian crudes like Qua Iboe, Bonny Light, EA Blend, Erha, Usan and Agbami.
In 2014, 18 percent of Nigerian crude exports went to India, according to data from the US Energy Information Administration.
According to Platts data, more than 25 percent of Nigerian crude imports have been going to India for May, June and July loading.
Similarly, Indian imports from Angola rose to a 14-month high of 1.19 million mt of crude oil, up 74 percent year-on-year, according to the shipping data.
India is also a regular buyer of crude from other countries in the region, notably Gabon, Equatorial Guinea, Cameroon and the Republic of Congo.
Sources said there are a host of reasons Indian demand for West African crudes has risen significantly in the past three or four months, including the narrow Brent/Dubai spread, lower ICE Brent, and weaker WAF crude differentials.
“The right circumstances have aligned for Indian refineries to continue to take more West African barrels,” Platt quoted unnamed trader.
Indian demand for light and medium sweet grades from West Africa has also risen amid stronger gasoline and middle distillate cracks, ably supported by strong refining margins.
“India is taking a lot more [WAF] than normal,” the trader said. “It’s very cheap differentials are at all-time lows.
The Nigerian National Petroleum Corporation lowered its July official selling prices for Bonny Light to a 23-cent premium over Dated Brent, the lowest premium since January 2005.
A narrowing of Brent crude prices to Dubai over the past year has made Brent-related crudes more appealing to Asian refiners, and this has incentivized Indian refiners to buy more West African crudes, which are normally traded at a differential to the Dated Brent benchmark.
Traders said there was significant interest for WAF grades in tenders by Indian refiners for July and August loadings; they expect this to persist for the coming weeks.