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Nigeria set for oil export to Europe

Nigeria is set to export highest volume of crude oil to Europe in June following production outages being experienced by producers in the UK’s North Sea oilfields, according to oil traders.

This is coming as the Organisation of Petroleum Exporting Countries (OPEC) is expected to roll over a deal on cutting crude supplies at a meeting next week and discuss deepening the production curbs that have been in place since January 1, 2019.

Reuters reported that Nigeria is set to export about 905,000 barrels per day (bpd) to the continent this month, the most since a roughly five-year high of about one million bpd in November, 2018.

Nigeria’s exports to Europe hit a five-year high of one million barrels per day in November 2018 but slumped to 677,000 – 700,000 barrels per day in the last seven months.

Norwegian and UK offshore fields in the North Sea normally provide a steady supply of lighter crude to refineries feeding northern Europe’s major economies and are traditionally more competitive than Nigerian grades due to their proximity.

But planned maintenance on Norway’s Ekofisk oilfields this month slashed exports to just one cargo from the usual 10-15.

Also, Flotta, another of the 12 North Sea fields, was said to be closed for repairs over two weeks in late May.

Supply of the five North Sea crude grades that underpin the dated Nigeria’s Brent benchmark is set to fall to around 720,000 bpd in June, from 948,000 bpd the month before.

The contamination of a pipeline carrying Russian Urals crude in April interrupted flows to central and eastern Europe for a month and left stocks in need of replenishment.

Higher volumes to Europe have provided an unexpected boon, with Nigerian exports to the United States on the wane for a decade due to increased US shale oil production, and demand relatively steady in Nigeria’s key markets India and Indonesia.

“(Europe) always tends to act as the clearing house at lower value than the East,” one trader selling Nigerian crude said.

Though European gasoline margins have been middling and especially poor among southern European refiners, several factors may mesh in coming months to support Nigerian differentials, which stand near multi-year highs.

Traders said the possibility of a permanent shutdown to the fire-stricken Philadelphia Energy Solutions refinery in the city, though it was a consistent importer of Nigerian crude, would increase demand for gasoline refined in Europe.

Nigeria’s Egina, heavy sweet crude from a new offshore field, has proved consistently popular among refiners in northwest Europe.

SOURCE: Nigerian News Direct