Unusual bid from BP stirs up Nigerian crude grades

Bidding interest from oil major, BP, seeking for an unusually large number of cargoes, stirred up interest in Nigerian crude grades. BP bid for 9 cargoes of Forcados, Bonny Light, Qua Iboe and Bonga all loading at various times throughout October up to dated Brent plus $1.70 a barrel. The Nigerian differentials held near one-month highs while spot trade were kept more muted.

Of the 56 cargoes in the broader Nigerian October loading programme, around 25 were said to be available for sale. According to traders, BP bided for 3 cargoes of Forcados and two cargoes of Bonny Light, Qua Iboe and Bonga each throughout October offering to pay dated Brent + $1.70 a barrel.

BP bought a cargo of Qua Iboe from Vitol at dated Brent plus $1.63 a barrel loading October 12-13 on a fob basis. This follows on two deals in which BP bought cargoes of Bonny Light and Qua Iboe from Vitol at dated Brent plus $1.70 loading in the first half of October.

It was also gathered that Chevron offered two cargoes of Agbami in the second half of October at dated Brent plus 20 cents, and Shell was offering one cargo of Agbami. Qua Iboe was being offered at dated Brent + $2.00 a barrel. Sahara bid for a cargo of Brass River loading Oct. 20-25 at dated Brent +1.00 a barrel.

Before the interest from BP, loading programmes for Nigeria’s largest streams show an overhang of some 30 cargoes persisted in the past few months at the time Nigerian differentials fell enough to whittle down an overhang of unsold cargoes. Forcados and Bonny Light were offered at the same levels around $1.30 above dated Brent and $1.10 – 1.20 a barrel,

In July this year, persistent overhang of Nigerian barrels kept spot trade sluggish on the West African market and traders said then that differentials were still far too high to entice much buying.

Nigeria depends on revenues from crude oil export as a major source of its foreign exchange earnings in addition to financing government’s budget.

FRANK UZUEGBUNAM