US becoming major oil exporter by 2024 means bad market for Nigeria, others
No doubt, Nigerian oil and gas market shares are getting squeezed by the day.
On Liquefied Natural Gas (LNG), there had been rising cold feet on the side of core investors for Train 7 of the NLNG since last year when it became clear that production costs and political interference in countries of other new entrants to global gas market are becoming more attractive than what obtains here in Nigeria.
However, another major fear that may hobble the Nigerian economy is the latest forecast by the Paris-based International Energy Agency (IEA) that the US will become the world’s second major oil exporting country by 2024, overtaking Russia and closing in on Saudi Arabia, the top oil exporter.
Industry analysts say the implications for Nigeria means stiff competition for sales of crude oil which had been and will continue to be the mainstay of the economy.
Even at a time the US is yet to complete developments in the Shale oil investment, Nigerian oil is finding it difficult to sale as most Nigerian traditional customers are changing direction to new entrants including Angola and Ghana.
Between the third quarter of 2018 to date, unconfirmed reports suggest that Nigerian oil had been on losing stretch of traditional buyers and that remains a key concern for an economy that gets over 85 per cent of its foreign earnings from crude oil.
According to its latest report on the sector, Oil 2019, the IEA said the US was driving global oil growth over the next five years because of the “remarkable strength of its shale industry, triggering a rapid transformation of world oil markets”.
The IEA said America’s transformation “into a major exporter within less than a decade is unprecedented”.
“It is because of the ability of the US shale industry to respond quickly to price signals by ramping up production,” the IEA added.
The US will account for 70 per cent of the total increase in global capacity up to 2024, adding four million barrels a day (b/d), having recorded a growth of 2.2 million b/d in 2018, according to the IEA.
“The second wave of the US shale revolution is coming,” said Dr Fatih Birol, the IEA’s Executive Director.
“It will see the United States account for 70 per cent of the rise in global oil production and some 75 per cent of the expansion in LNG [liquified natural gas] trade over the next five years.
“This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy.”
The IEA report said America’s shale revolution was also changing things for refiners.
It added that these barrels were generally lighter and sweeter than the average crude slate, which meant they required less complex refining processes to turn them into final products.
Observers’ say this singular factor is capable of sinking Nigeria’s prospects in deepening investments in the sector.
