China to buy more of Nigeria, ME countries’ oil

The impact of the trade war currently going on between the two largest economies in the world, US and China may benefit Nigeria, Angola and some middle eastern countries as China may look more into them as alternative supplier for their crude oil, according to a U.K. research company, Wood Mackenzie.

“While China could secure the crude from Nigeria and other alternative sources, the US would find it hard to find an alternative market that is as big as China,” WoodMac said in the report released in July.

Wood Mackenzie which is also known as WoodMac is a global energy, chemicals, renewables, metals and mining research and consultancy group with an international reputation for supplying comprehensive data, written analysis and consultancy advice which is based in Scotland

Many experts have agreed with the Wood Mackenzie reports as they all expects China to buy Nigeria’s light crude oil while Angola and Middle Eastern countries will take care of its medium crude oil needs

Analysts in Nigeria’s oil industry have suggested that it will be a good thing for the Nigeria but also sceptical about Nigeria’s capability to meet the demand from China.

Ayodele Oni an energy partner at Bloomfield Law Practice said if the demand for oil from China increases we will be forced to produce more oil but the challenge might be if we can meet up with China’s demand.

“What Nigeria National Petroleum Corporation (NNPC) can do is to go into arrangements with other oil exploration, production and service companies so that they will be the one that is producing the oil fields and at the end of the day they get the proceeds from the sale,” Oni told BusinessDay during a telephone interview.

Ibrahim Tajudeem, Head of Research, Chapel Hill Denham said it’s a positive development to have a major country like China looking to buy more oil from Nigeria, however Nigeria must ensure stability and efficiency in local production.

“We should be able to manage all our risks; and these risks are largely associated with the Niger delta region,” Tajudeem said.

Recall on July 6th 2018, U.S. President Donald Trump’s administration officially instituted 25 percent duties on $34 billion worth of Chinese goods; China on its part responded by implementing retaliatory tariffs on the U.S. shortly afterward. The following week, the U.S. released a list of Chinese goods with an annual trade value of about $200 billion that may be subjected to 10 percent tariffs.

According to Observatory of Economic Complexity (OEC), the world’s visualization engine for international trade data, China imported about 2.3 percent of Nigeria’s crude oil out of a total of $36.9 billion in 2016.This shows that China imports little amount of oil from Nigeria but as a result of the trade war they might increase their volume of importation

President Donald Trump has threatened further tariffs unless Beijing agrees to change its intellectual property practices and high-technology industrial subsidy plans.

Trump has also hit European metal imports with tariffs and has threatened to curb car imports from Europe with a 20 per cent duty.