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Nigeria plans to export a total of at least 2.04 million barrels per day (bpd) of crude oil in October, the highest level this year, according to provisional loading programmes.
The exports, which will load on 68 cargoes, could increase as the programmes for at least two grades were still pending.
The amount compares with planned September exports of just under 2 million barrels per day, and is the highest total since January, when the country issued an initial programme of 62.97 million bpd, or 2.03 million bpd.
The record comes at an unfortunate time, as European refinery maintenance typically peaks in October, limiting the amount of crude oil they consume.
Wilting demand in Asia, where Chinese refineries are cutting runs and that country’s shaky economic growth is roiling international commodity markets, has already begun to pressure differentials to dated Brent for West African crude grades.
Additionally, though crude oil futures were rallying on Tuesday, the Brent benchmark on which Nigerian export prices are based was still close to 6-1/2 year lows.
Nigeria is moving to rapidly diversify the country’s economy to stop its dependency on crude oil exports, Nigerian President Muhammadu Buhari said Thursday, last week.
Nigeria has depended on oil as its major source of revenue in the last three decades at the expense of agriculture and other sectors, Buhari said. He spoke as he received new ambassadors.
Buhari, who took power in late May, inherited near-empty coffers, tens of thousands of unpaid civil servants and an economy battered by a sharp drop in oil prices. Africa’s largest economy and oil producer has also been plagued by widespread corruption, especially in the oil sector. In July, a government body revealed more than US$20 billion in oil revenue to be missing.
Despite the challenges, Nigeria is still attracting investment due to the scale of the market, according to analysts. South African supermarket giant Shoprite announced last week that it will open 14 new stores in addition to the existing 12 in Nigeria.
“Nigeria isn’t a particularly appealing market. It’s a very difficult place to do business, growth is stalling, and the retail sector is much less well-developed than other markets, like Kenya,” said John Ashbourne, the Africa expert in Capital Economics, a leading macro-economic research firm. “But the potential for growth is absolutely jaw-dropping if you manage to get in, as they say, on the ground floor of a country that could have 500 million people within a few decades.”
Ashbourne said expansion of the economy of just Lagos, the country’s commercial capital, is almost as big as Angola’s.
“If independent, (Lagos) would be Sub-Saharan Africa’s fourth largest economy, after the rest of Nigeria, South Africa, and Angola,” he said.
