Just as Indian state-run oil refiners have indicated interest to increase total crude oil consumption volume next year with additional 2 million metric tonne (mt) of crude oil import from Nigeria in 2017, the Minister of State for Petroleum, Ibe Kachikwu has revealed that oil output by next year will climb to 2.1m bpd.
State-owned refiners like Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd, (HPCL) are major regular buyers of Nigerian crude like Qua Iboe, Bonny Light, Escravos, EA Blend, Erha, Usan and Agbami.
It would be recalled that the Nigerian crude oil term contracts involve the export of around 1.17 million barrels per day (b/d) of Nigerian crude, out of the 2.2 million b/d the country can theoretically produce.
They are then sold by contract holders to end users, refiners and other buyers.
In an interview in New Delhi, the Group Executive Director, Nigerian National Petroleum Corporation, NNPC, Refineries, Anibor Kragha, stated: “Three Indian companies mentioned that they are looking for a combined total of 11 million mt in 2017 from 9 million mt this year.
“Now, what they will get is a balance between term contracts and spot sales contracts.”
He said there was an ongoing negotiation as he was not sure if the deal would materialize.
“We just came out of a meeting with key Indian oil companies and they are pushing to get incremental allocations for the term contracts. We explained to them that there needs to be a balance.
“Once Nigerian output recovers, it will increasingly look towards India as the major buyer of its crude. Indian demand is very positive for us. A vibrant Indian economy is good for us.”
The two countries have been working on a memorandum of understanding in the past month to enable the participation of Indian companies in Nigeria’s upstream and downstream oil and gas sectors.
The deal being negotiated by Nigeria will also have the Indian government make an upfront payment for the purchase of Nigeria’s crude on a long-term basis as well as Indian public sector companies investing in Nigerian refineries.
Indian state-owned refiners tend to buy most of their crude on term contracts while their remaining requirements are sought via tenders.
India is a significant buyer of Nigerian crude, which is largely light and sweet, rich in gasoline and diesel and low in sulfur, and meets the needs of Indian refiners.
According to a source from an Indian refiner “Nigerian crude is a must for most of our refineries, especially the older ones, which have been designed to run light sweet crude.
“Despite all the militancy issues, we still buy Nigerian crude, as our refineries need it. We will continue to buy Nigerian crude, but we want them to supply us with more,” he said.
India, which is currently among the world’s fastest growing economies, has seen its gasoline and gasoil demand climb sharply over the past few years.
