As negotiated with OPEC+, Nigeria seems to be fully committed to fulfilling its quota. Nigeria’s compliance has increased since August, according to the country’s minister of petroleum policy. In October, crude output stood at nearly 1.8 million b/d, far lower than the 1.96 million b/d produced in June, as production from the new Egina field increased. Lagos argued that Egina barrels should be removed as condensate does not come within OPEC limits.
The grades of the country remain popular, with the export program already reaching its last cargo for December, as the global market remains quite thirsty for both lighter and heavier barrels of Nigeria. Robust gasoline cracks and price increases in competing grades have supported improved demand. When shipping hubs get ready for 2020, demand for the few heavy sour grades in West Africa is quite high. Prices for Bonga and Egina reached record highs as more low-sulfur fuels were produced by refiners.
Meanwhile, China has been importing more crude oil from West Africa, but mostly from Angola, with flows at HIS Markit Commodities at Sea exceeding 1.48 million b/d. In total, so far in 2019, Asia has imported about 2.4 million b/d of West African crude oil. In the last couple of months, India and the rest of Asia have absorbed more, while flows to North-West Europe remain strong.
In connection with production cuts and declining flows from Saudi Arabia to the rest of Asia (excluding China), the continent had to rely more on alternative suppliers, with West Africa partly filling the gap after the collapse of Venezuela. Oil prices also supported Asia’s appetite for West African grades, with Middle East oil becoming relatively more expensive than other grades.