Experts predict dip in fortunes for Nigeria amid India, China talks to Russia
May 08 (THEWILL) – Oil and gas experts have predicted that Nigeria could suffer a huge drop in revenue if negotiations planned by its two main importers, India and China, with Russia are successful.
There have been recent reports that Nigeria could lose its biggest crude oil buyers, China and India, as the two countries plan to trade Russian oil at cut prices.
India reportedly asked Russia for a reduced price below $70 a barrel.
Engineer Caleb Abanemeh, an oil and gas industry analyst, said Europe’s proposed supply embargo against Russian oil and gas would force Russia to seek alternative consumers at all costs.
According to him, the economic principle of supply and demand, which plays a major role as a decision-making mechanism, will force Russia to sell the product at a very favorable price to attract viable consumers.
“India is the biggest consumer of Nigerian crude, while China is the biggest exporter of goods; both are highly industrialized and have been Nigeria’s major trading partners. If the deal with Russia is successful, Nigeria is on the way to a serious fiscal challenge,” Abanemeh told THEWILL.
Similarly, another oil and gas analyst, Selene Alao, pointed out that Nigeria has done well with India as the main consumer of its oil.
“But now that India, known for its conservative attitude, is looking in the direction of Russia, it means it will abandon Nigerian oil, which will be considered ‘too expensive’, for a cheaper supply from of Russia,” she said, adding that this would aggravate Nigeria’s fiscal challenge.
Nigeria is currently struggling to meet OPEC’s production quota of 1.7 million barrels per day. The country’s current production hovers around 1.2 MB/d, according to OPEC data.
The move by China and India comes as Europe plans to ban Russian oil, due to the country’s invasion of Ukraine.
It may be recalled that OPEC Secretary General Mohammad Barkindo, during his speech at the offshore technology conference, OTC, in Houston last week, reiterated that there is no replacement for the supply of the Russian oil market by seven million barrels per day.
The European Commission had proposed a total ban on Russian crude oil m, following the continued attack on Ukraine, from where China and India are approaching Russia for negotiations.
Although the proposed ban has sent oil prices above $108 a barrel, reports indicate countries are starting to negotiate discounts as low as $30 a barrel, with India and China the latest dealmakers for $70 a barrel and less to compensate for logistics, financing and penalties. troubles.
If India and China succeed in persuading Russia to sell at cut prices, then Nigeria will lose its biggest buyers, as reports indicate that India could import up to 15 million barrels of Russian oil from may.
Nigeria’s crude oil exports to India were valued at $4.56 billion in 2020, while exports to China were $1.02 billion, according to the United Nations COMTRADE database on the international trade.
As of 10:08 a.m. (Nigerian time) on Friday, Brent rose to $112.60 a barrel, adding $1.54 or 1.39% after a closing price of around $110 a barrel.
European Commission President Ursula von der Leyen told the European Parliament that as part of the sixth sanctions package against Russia following its invasion of Ukraine, the Commission is proposing a complete ban on imports of Russian oil to from the end of the year.
“Let’s be clear: it won’t be easy. Some Member States are heavily dependent on Russian oil. But we just have to work on it. We are now proposing a ban on Russian oil. This will be a complete import ban on all Russian oil, transported by sea and by pipeline, crude and refined,” von der Leyen said.
“We will ensure that Russian oil is phased out in an orderly manner, in a way that allows us and our partners to secure alternative supply routes and minimize the impact on global markets. That is why we We will phase out Russian supplies of crude oil within six months and of refined products by the end of the year,” the Commission President said.