The discovery of shale oil by the United States to meet its domestic crude oil needs may adversely affect Nigeria’s revenue.
As a result, the Nigerian National Petroleum Corporation has expressed fears, saying the US might go into territories currently being served by Nigeria’s oil, after satisfying its local crude oil needs.
Speaking on the implications of the development, the General Manager, Media Relations Department, Group Public Affairs Division, NNPC, Dr. Omar Farouk, told our correspondent on Sunday that it posed a great concern, not just to Nigeria, but also to other African nations exporting crude oil.
He said, “We (Nigeria) risk a situation where they (US) can even go into territories that we are currently supplying. And the fear exists that if America is going to offer to sell oil to some countries, even at a marginally higher price, the countries are likely to accept it more than Nigeria.
“We risk a situation where, in the first place, we will lose our market in America. But beyond that, we also risk a situation where America, having satisfied itself with what it has, will also want to find a market outside. And that market may also be a market that Nigeria is selling to.”
Early this month, a report by the Energy Information Administration, the Energy Department’s statistical arm of the US government, showed that domestic crude oil production exceeded imports for the first time in 16 years.
The EIA data indicated that imports to the US from Nigeria tumbled to a record low in February, going back to 1995.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had stated that a committee set up by the Organisation of Petroleum Exporting Countries had initiated a study into shale and would consider the effect of shale oil on the global market for OPEC crude “in the not-too-distant future.”
Farouk explained that the increased production of shale oil in the US had particularly affected imports from Africa, which typically produce lighter grades of oil similar to the North American blends.
He added that with the volatility in Nigeria’s oil production, many countries might want to go into agreements with the US on crude oil supply.
He said, “The reason is because they know that if they go into agreement with America, the chances of the oil companies there declaring force majeure is very slim, and they are assured of guaranteed supply with more flexibility.
“But if they are to go for cheap oil from Nigeria, there is no guarantee.”
Information from Punch was used in this report.