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Anxiety rising over plans by India, current highest buyer of Nigerian oil to quit

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Indications have emerged that leading buyer of Nigeria’s crude oil; India’s Hindustan Petroleum Corporation is about concluding plans to adopt United States’ low-sulphur oil over Nigeria’s sweet crude.

The HPCL’s Finance Chief, J. Ramaswamy, said the company was evaluating if Nigerian sweet oil could be replaced with the US oil.

He added that HPCL had the appetite to import a very large crude carrier containing two million barrels of the US oil every month.

HPCL reported a 56 per cent drop in net profit for the fiscal first quarter on Friday, as inventory losses dragged down its refining margins.

India is the latest Asian country to buy the US crude, following South Korea, Japan, China, Thailand, Australia and Taiwan, after OPEC cuts drove up prices of Middle East heavy-sour crude, or grades with a high sulphur content.

Should India shift its bulk oil purchase from Nigeria to the US, the zero oil revenue days that was predicted by Acting President Yemi Osinbajo late last month as being around the corner, might be approaching faster than envisaged.

Already, trouble had started for the Nigerian economy since the US stopped the purchase of Nigerian crude about three years ago, a development that made Nigeria to turn to Asia, and India, China and Pakistan for sales which had been moderately low, thus driving paucity of fund for several federal government’s projects and observed drop in monthly allocation.

But the last straw that may break the Carmel’s back is the critical decision by India to halt purchase of sweet crude from Nigeria at a time government is saying that cost of production is becoming unbearable.

Reuters weekend, reported that the state-owned corporation said it planned to buy low-sulphur oil from the United States in the next few months for its 166,000 barrel per day Vizag refinery in southern India.

According to the Chairman, India lead oil corporation, M.K. Surana, “We are also going to buy in the near future, in some months. There are certain grades, which we found suitable for us”.

“We should have a wider basket and more options. The US crude is an additional option for us.”

The Acting president, had told operators in Nigeria and other oil producing countries that zero oil revenue days were fast approaching, stressing that it was time to start looking for other sustainable means of generating revenue.

He said “Almost every major oil importing country today has embarked on an aggressive non-fossil fuel alternative programme. China, Japan and some Scandinavian states have already set dates within the next 10 to 15 years to produce and use only electric vehicles. The zero oil days are clearly around the corner”.

This is coming as new report showed that Indian refiners stepped up purchases of the US oil after Prime Minister Narendra Modi’s visit to the Washington in June when President Donald Trump said the United States looked forward to exporting more energy products to the world’s third-biggest oil buyer.

Since then, state-run Indian Oil Corp and Bharat Petroleum Corp have bought the US oil, as Indian refiners seek to diversify their crude import sources as arbitrage opens due to global oil supply cuts.