Crude oil customers from India, Indonesia and the United States are turning away from Nigerian oil over uncertainty about deliveries as attacks by militants have reduced Nigeria’s oil output.
Their reluctance is limiting the prices Nigeria can get for its oil even as there is production.
Four of Nigeria’s oil grades – including the largest stream, Qua Iboe, have been under force majeure in the past month, a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
India’s HPCL 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.
Reuters reported that India’s state-run Indian Oil Corp. Ltd, a major buyer of Nigerian grades over the past year, had stated in its recent tenders that it would not take grades under force majeure. Qua Iboe remained off the list in its latest tender, according to a document seen by Reuters, an extremely unusual development in its requests for sweet crude.
“Not everybody wants to be caught up in that, so they will avoid it,” Olivier Jakob, managing director of PetroMatrix in Switzerland told Reuters.
“The refineries will walk away from it,” he added.
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 escalated, although Daniel Purba, the senior vice president of ISC Pertamina, told Reuters by text message that Pertamina was “monitoring” Nigeria, but “currently it’s still not affecting crude purchases.”
