Nigeria’s crude oil export to India set to drop further

Nigeria’s over $13bn annual crude oil export to India may be under threat as the South Asian country plans to tap its $40 billion worth of oil and gas reserve by attracting $25 billion investments into the sector in a policy to reduce dependence on imported energy.

India’s trade with Nigeria, largely in petroleum products has been decreasing in recent times. Figures from the High commission of India shows that the country’s imports from Nigeria decreased from US$ 14.01 billion in 2013-14 to US$ 13.68 billion in 2014-15.

Out of total imports, India imported a total of US$13.53 billion worth of crude and petroleum products in 2014-15 against US$13.96 billion in 2013-14.

While these figures represent about 12% of India’s energy requirement, Narendra Modi, Prime Minister of India is instituting reforms that would reduce 10 percent of India’s imported oil by 2022.

Dharmendra Pradhan, India minister of state for petroleum and natural gas told Bloomberg that as part of the reform programme to tap $40 billion worth of proven reserves, India aims to attract $25bn of investment in natural gas and crude oil in the next few years, hence it has created a new hydrocarbon exploration and licensing policy (Help) and liberalised her gas price regime to reduce their dependence on imported energy over the next 10-15 years.

The Indian government had previously said it expected to monetise unexploited gas reserves of around 6.75tn cubic feet, worth more than $28bn, from existing and future discoveries.

Speaking on the implication of declining markets for Nigerian petroleum products, Dolapo Oni, head of Energy Research, Ecobank Capital, has said that Nigeria’s crude will continue to face challenges to sell because other grades are now cheaper and also attractive to buyers with the implication of lower revenue for the government.

Nigeria is Africa’s top exporter to India and the trade is largely in petroleum products.

African exports to India 2014- 2015 figures

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Crude oil prices have dipped below $40 dollars leading law makers to reduce budget benchmark from $38 dollars $36 dollars however experts say falling oil prices and market uncertainties present opportunities.

Phillip Asiodu, foremost economist and permanent secretary, says falling crude oil prices is an opportunity for Nigeria to diversify its economy away from oil.

Arunma Oteh, Vice President/Treasurer World Bank, advised at a recent lecture that current reforms of the oil industry should not be the end goal but a means to help finance the country’s growth by providing incentives to diversify the economy and invest in infrastructure and industries of the future.

In the view of Akin Iwayemi, member of Nigerian Association for Energy Economics and professor, department of economics, University of Ibadan, says Nigeria should look beyond a world without oil.

“Nigeria’s interest should go beyond those who will buy more or less of our oil, but to determine where we want the oil industry to be. We should craft our economic interest and let it guide our engagement with oil.”

ISAAC ANYAOGU