Nigeria: As U.S. Shuts Its Door On Nigeria's Oil Exports
By Chika Amanze-Nwachuku* [caption id="attachment_12669" align="alignleft" width="400"] Diezani Alison-Madueke[/caption] Nigeria has become the first country to completely stop selling oil to the United States of America, the world’s largest oil producer and consumer, due to the impact of the shale revolution – an astounding reversal – as the country was only four years ago one of the top five oil suppliers to America. According to the US Department of Energy, Nigeria did not export a single barrel of crude to US-based refiners in July for the first time since records started in 1973. Preliminary data suggest the trend continued in August and September, the London-based Financial Times reported thursday. Many oil producers have seen their exports to the US drop as domestic production rises thanks to the use of new technologies such as horizontal drilling and hydraulic fracturing, or fracking. But Nigeria is the first to fully stop exporting crude. At its peak in February 2006, the US imported 1.3 million barrels per day (mb/d) from Nigeria – equal to roughly one super tanker the size of the Exxon Valdez every day. By 2012, Nigeria was just selling 0.5m b/d, but was still one of the top five suppliers to the US, alongside Saudi Arabia, Canada, Mexico and Venezuela. Earlier this year, sales dropped to a trickle of about 100,000 b/d. And in July, they completely stopped. Nigeria, a member of the Organisation of the Petroleum Exporting Countries (OPEC) oil cartel, is Africa’s largest oil producer and international companies from ExxonMobil to Royal Dutch Shell and from Total to Chevron operate some of the country’s major oil fields. But most of them are divesting of these assets in the country, as they undertake a portfolio rotation of their assets to divert more resources in shale oil production. The shale revolution has affected US oil suppliers unevenly, hitting particularly hard those in Africa such as Nigeria, Algeria, Libya and Angola, which produce high quality crude similar to the one pumped in the new oil fields of North Dakota. Middle East producers such as Saudi Arabia and Kuwait have suffered far less as they pump crude oil of a lower quality that US refiners continue to buy. Saudi crude oil exports year-to-date to the US have increased over the 2013 level. Kuwait has also sold more crude to the US so far this year than in 2013. Overall, US crude oil imports hit a peak of 10.8m b/d in July 2005. Since then, they have fallen by roughly a third to hit 7.6m b/d in July as domestic production boomed. The dramatic collapse in Nigerian crude oil exports to American refiners corroborates a warning a year ago by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, that shale was “one of the most serious threats for African [oil] producers”. Nigeria has offset the impact of the drop in US sales lifting exports towards Asia, with India supplanting the US as Nigeria’s largest importer of her crude oil.