Refineries from India and the United States are backing away from buying Nigerian oil amid heightened uncertainty about future deliveries, following incessant attacks on oil installations in the Niger Delta.
Their reluctance to buy is limiting the prices Nigeria can get for its oil even as there is less of it, another hit to the finances of a country battling its worst economic crisis in decades, Reuters say.
Following the attacks, some oil facilities have clawed back output, but militant attacks have continued and the Niger Delta Avengers has vowed to bring Nigerian production to zero.
“Not everybody wants to be caught up in that, so they will avoid it,” the Managing Director of PetroMatrix in Switzerland, Olivier Jakob, said, adding, “The refineries will walk away from it.”
India’s Hindustan Petroleum Corporation Limited was forced last month to cancel a vessel it chartered to carry two million barrels of West African crude due to the Qua Iboe force majeure.
The state-run Indian Oil Corporation Limited, a major buyer of Nigerian grades over the past year, has stated in its recent tenders that it would not take grades under force majeure.
Qua Iboe, Nigeria’s largest crude oil stream, remained off the list in its latest tender, an extremely unusual development in its requests for sweet crude.
Indonesia’s Pertamina, another frequent buyer, also chose not to buy Nigerian grades in its recent tenders, favouring Congolese Coco, Angolan Girassol and Saharan Blend from Algeria instead.
Traders said Pertamina had shifted its preferences since the violence and uncertainty in Nigeria escalated, although the Senior Vice-President, ISC Pertamina, Daniel Purba, said the firm was “monitoring” Nigeria, but “currently it’s still not affecting crude purchasing.”
Four of Nigeria’s oil grades, including the largest stream, Qua Iboe, have in the past month been under force majeure, a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.