Data from India’s Petroleum Planning & Analysis Cell showed that the Nigeria’s largest crude oil importer reduced oil imports by $39.5bn in April. As a result of this reduction, Nigeria’s revenue earning capacity has come under threat.
According to the Indian High Commission in Nigeria, India’s crude oil imports from Nigeria in 2020 amounted to $10.03bn. This represented 17 per cent of Nigeria’s total crude exports for the year.
The lockdowns in India’s major cities from COVID-19 surge in April had ripple effects on Nigeria’s oil sales and the Nigerian National Petroleum Commission (NNPC) was prompted to drop the official standard price of its main export streams, Bonny Light, Brass River, Erha and Qua Iboe by 61-62 cents per barrel below its April 2021 prices. They traded at $0.9, $0.8, $0.65, $0.97 per barrel respectively, below dated Brent, the international benchmark, as Oilprice.com showed.
An official at the Indian Oil Corporation (IOC) was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.”
Reports had it that India bought more American and Canadian oil at the expense Africa and the Middle East, thus reducing purchases from members of the Organisation of the Petroleum Exporting Countries to around 2.86 million barrels per day.
This development squeezed the group’s share of imports to 72 per cent from around 80 per cent previously, as India’s refiners were diversifying purchases to boost margins, according to Reuters.
According to Bloomberg, India also plans to increase local crude oil production and reduce import expenses as its population swells. A deregulation plan by the Narendra Modi-led government to boost national production to 40 million tonnes of crude oil by 2023/2024, an increase of almost eight million tonnes, had already been initiated.
Indian newspaper, Business Today, reported that the country currently imports 82 per cent of its oil needs, which amounted to $87bn in 2019. Report also has it that the state-owned Oil and Natural Gas Corporation produces about 20.3 million tonnes of crude oil annually. Increasing total production to 40 million tonnes will therefore reduce total imports to 67 per cent.