Nigeria resumes petrol import from China

petrol

Nigeria, Africa’s biggest oil producer and exporter, has recommence importation of petrol from China, the world’s top crude oil importer.

 

 

The Asian country shipped 37,000 metric tonnes of petrol to Nigeria in September for the first time since July 2019, data from General Administration of Customs showed, according to S&P Global Platts.

 

 

China, a major exporter of transportation fuels, has extended exports to Africa in recent years.

 

 

Togo was the first African country to receive Chinese petrol in April 2018 at 50,000 mt, followed by Nigeria in January 2019 at 51,000 mt, historical GAC data proved.

 

 

According to data proved, June was the most recent diesel exports from China to Africa, with Kenya and South Africa receiving at least 40,000 mt and 35,000 mt, each respectively, according to the data proved.

 

 

China’s annual crude oil imports increased by 0.9 million barrels per day in 2019 to an average of 10.1 million bpd, according to the United States Energy Information Administration.

 

 

The EIA said China’s new refinery capacity and strategic inventory stockpiling, combined with flat domestic oil production, were the major factors contributing to the increase in its crude oil imports in 2019.

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Last year, China’s refinery capacity increased by 1.0 million bpd, primarily because two new refining and petrochemical complexes came online with capacities of 0.4 million bpd each.

 

 

As a result, the country’s refinery processing also increased to an all-time high in 2019, averaging 13.0 million bpd for the year, according to the EIA.

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Nigeria has continued to rely heavily on importation for many years to meet its fuel needs as the nation’s refineries remain in a state of disrepair.

 

 

Uneven demand recovery in Africa has led to a divergence in support for Asian transportation fuel markets as diesel and jet fuel requirements weaken while demand for petrol remains robust, industry sources said.

Petroleum Industries In China

 

The slowdown in Africa’s diesel and jet fuel demand, in particular, has removed a significant pillar of support from Asian middle distillate markets after buoying them for most of the third quarter, the sources said.

 

The African continent draws most of its petrol and middle distillate imports from the Persian Gulf and the Mediterranean, and an increase in demand typically lends indirect support to Asia, market sources said.

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Chinese investment in Nigeria’s oil and gas industry has reached $16 billion, according to Nigeria’s state-run oil company. While Nigeria’s oil industry welcomes China’s interest, analysts worry about a lack of transparency in the sector and slow development of the country’s renewable energy market.

 

When a top official with China’s third-largest national oil company paid a visit to Abuja, Nigeria this month, he was recommended by a top official of Nigeria’s state-run oil company to increase investment in Nigeria’s petroleum industry.

 

Mele Kyari, the managing director of the Nigerian National Petroleum Corporation, or NNPC, thanked the China National Offshore Oil Corp., or CNOOC, for its continued support of Nigeria’s oil and gas sector. Chinese investments in the sector have reached $16 billion. Kyari added that Nigeria needs partners like China.

 

The two countries need each other to reach their oil production targets. Africa’s largest oil producing nation pumps 2 million barrels a day and has a goal of producing 3 million barrels a day by 2023. China’s domestic oil production has been on a steady decline because of natural depletion and other geological challenges. So experts predict that up to 80 percent of China’s crude oil supply will be imported by 2030.

 

In comes Nigeria.

CNOOC started doing business in Nigeria in 2005 and is the largest Chinese entity investor in Nigeria. With a focus on overseas investment, it’s also China’s largest offshore oil and natural gas developer.

 

 

The company’s executive vice president, Lu Yan Ji, said during the meeting that Nigeria is one of the company’s largest investment destinations. He also said that CNOOC is producing 800,000 barrels per day, but it wants to reach 1.2 million. Ji hopes Nigeria can help with that.

But there’s skepticism.

 

Nigeria has had a hard time reaching its production targets. There’s sporadic militancy in the oil-producing region, as young people often take violent action to demand more access to the country’s oil wealth. There’s theft happening right at the pipelines. Fires often burn at rusted pipes, and oil operations in Nigeria are disrupted several times a year.

Also there’s a serious lack of transparency. The NNPC has a long history of scandals, with ongoing accusations of corruption.

Nigerian president Muhammadu Buhari reads a document during the African Union summit at the Palais des Congres in Niamey, July 7, 2019.

Crude oil is Nigeria’s most lucrative export, and the NNPC has not been able to account for billions of dollars in revenue. President Muhammadu Buhari has not appointed anyone as the oil minister. He handles that highly sought after portfolio himself in his second term as president, just as he did in his first.

 

Corruption is also why some Nigerians aren’t applauding China for pouring money into Nigeria’s murky oil industry.