Asia is set to import record volumes of oil from Nigeria and
Angola this year as increasing supplies of high quality crude drive down its
export prices and some buyers shun their traditional supplier, Iran. A Reuters survey of trade and shipping sources
monitored by Nigeria Energy Intelligence shows that end-consumers in China, India,
Indonesia and other Asian countries have bought around 1.74 million barrels per
day (bpd) of crude for loading in the first nine months of this year, up around
8 percent from the same period in 2011.
Strong economic growth in China and other industrial
economies across Asia is driving a rapid increase in demand for crude oil. African
crude oil is typically "sweet", containing low levels of corrosive sulphur
compounds, and much of it is also relatively heavy, meeting Asian demand for
heavy industrial fuel oil and distillates such as kerosene. Africa's two biggest oil producers, Nigeria
and Angola, have been well placed to meet this extra consumption and exports
from the West African region to Asia have risen by more than 50 percent over
the last five years.
In the last year, this trend has been accelerated by a big
jump in U.S. output of light, high quality crudes. This new domestic production
has supplanted oil that used to be imported from Africa and also forced down
global spot prices of some grades of West African crude oil. At the same time, many oil refiners that used
to take Iranian oil have been scared off by the U.S. and European Union
campaign against the Islamic Republic and have instead taken attractively
priced oil from Africa.
Asian buyers, who usually negotiate their spot and term
import contracts at least a month before loading, have committed to take an
average of around 1.64 million bpd of West African crude in the third quarter
of this year, up from around 1.46 million bpd in the third quarter of 2011. August has been a particularly strong month
for imports into Asia with 60 cargoes carrying around 1.84 million bpd heading
east. China, the world's top energy consumer, has taken around 28 cargoes,
while Indian refiners have bought 21 cargoes.
September looks like a slower month for imports into Asia
with price pressures taking their toll on volumes. West African crude oil is
priced against North Sea Brent crude, which has been strong relative to Dubai
crude, eroding some of the price advantages enjoyed by Nigerian, Angolan and
other West African grades. The flow of crude oil to Asia from West Africa is
likely to keep moving up going into the fourth quarter as Chinese refiners
start to restock again, traders say, ensuring total volumes in 2012 exceed
previous years.
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