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    Posted June 16, 2014 by
    chuks1234
    Location
    nigeria, China

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    China mulls cut in oil imports from Nigeria

     
    China, one of the biggest importers of Nigeria’s crude oil is planning a major cut in oil importation from Nigeria, it was learnt at the weekend. Chinese President Xi Jinping ,said China, which imports about 900,000 barrels of oil from Nigeria daily, “needs a revolution in the way it produces and consumes energy, as demand continues to rise and supply challenges mount.” He, however, said in remarks published by the official Xinhua news agency that the country needed to surmount challenges in oil importation and supply.

    “Although our country’s energy development has achieved great successes, we are facing challenges, including huge demand pressures, supply restraints, serious environmental losses caused by the production and consumption of energy and technological backwardness,” Xinhua quoted Xi as saying.

    Xi told a meeting of Communist Party officials that China, already the world’s largest energy-consuming nation, needed to “restrain irrational energy consumption” and impose controls on overall energy use. China has already committed itself to controlling overall energy use and said in its 2011-2015 plan for the energy sector, it would strive to keep total consumption to within four billion tonnes of coal equivalent by 2015.

    However, the target was not mandatory and was still 23 per cent higher than 2010. The Chinese president also called for a revolution in supply that would involve the country diversifying into non-coal energy sources.

    Coal currently supplies around two-thirds of China’s total primary energy demand, with the country striving to reduce that figure to less than 65 per cent by the end of this year. President Xi also said China needed to strengthen cooperation with big oil and gas producing regions such as the Middle East, central Asia, America and Africa in a bid to boost its oil and gas storage and distribution capacity.

    He also called for the acceleration of China’s nuclear reactor programme on the eastern coast. Should the review being considered by China lead to a reduction in the quantity of crude oil it imports from Nigeria, the country will be under pressure to find large-scale buyers for its Brent crude, the mainstay of the nation’s economy.

    China had become an important economic ally to Nigeria following a drop in the crude oil import by the United States as a result of the discovery of shale oil. The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Andrew Yakubu, had earlier said China had become the alternative market for Nigeria’s crude oil, following dwindling imports by the United States, which was the major buyer of the commodity from Nigeria. In recent years, China has demonstrated increasing appetite for Nigeria’s oil and gas resources. Chinese National Offshore Oil Corporation (CNOOC), one of China’s largest state-run oil and gas producers, had agreed to buy a 45 per cent stake in the Oil Mining Lease (OML) 130 field, which is owned by South Atlantic Petroleum.

    CNOOC has been scouting for overseas oil and gas assets to supply China’s growing domestic market, as the country’s appetite for oil and gas is said to be second only to that of the United States. The NNPC had however stated that China was a very good market for any shortfall in the United States’ imports.

    The NNPC boss said: “The decision of the United States is not driven by the fact that they don’t want to buy our oil; they have other issues. The shale gas has been discovered and it is a major source of energy. But of course, the good news is that there are other parts of the world that are interested. As you know, major demand growth is going to come from China and the east. So, that is a very good replacement of whatever shortfall we have with the United States.”

    Nigeria’s crude oil export to the United States, which was over one million barrels per day (bpd) in December 2009, has declined to 352,000bpd, representing a loss of about 70 per cent of the United States’ market. Statistics indicate that Nigeria was the third largest supplier of crude oil to the United States in 2010, with the US accounting for 43 per cent of Nigeria’s exports.

    In September 2011, Nigeria’s crude export to the United States dropped to 580, 000bpd, with the country assuming the sixth position, after Canada, Saudi Arabia, Mexico, Venezuela and Russia. Nigeria’s crude export to the United States further dwindled to 352,000bpd as at February 2012.

    Though refiners in Asia are said to be increasing crude oil imports, it is more difficult to ship crude oil from Nigeria to Asian countries than to the United States because of the longer distance. For instance, the distance from the Shell’s Bonny Export terminal in Rivers State, to Tianjin, China, is 12,172 miles, compared with 5,847 miles to New York Harbour in the United States. With these long distances, Asian refiners are said to be demanding discount to buy Nigeria’s crude.

    Refiners that use Nigeria’s crude oil are also closing plants on the United States East Coast, the main destination for Nigerian exports, amid falling returns on investment. Recent reports indicated that Sunoco stopped production at the 194,000-barrel per day Marcus Hook plant in Pennsylvania on December 2011.

    ConocoPhillips also stopped its 190,000-barrel per day Trainer, plant site on September 30, 2011 and the two facilities together accounted for half of East Coast crude oil processing capacity.

    more to come this update report

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