“West Africa has always been and will continue to be, for a number of years, a very substantial crude oil producer but because of some of the changes going on in the global crude oil supply balance in recent years, the range of buyers of West African crude oil, Nigerian grades in particular, is increasing,” Platts editorial director Andrew Bonnington told CNBC Africa on Monday.
“What’s happening is the US in particular is increasing crude oil production and as a result of that, less crude oil is going from Nigeria to the US. As a result of that, Nigeria is having to find new markets for its crude oil and there’s a lot more interest as a result in Nigerian and Angolan grades of crude oil. That’s one of the main reasons that led us to introduce some new assessments for five new crude oil grades, two from Nigeria, one from the Democratic Republic of Congo and two from Angola.”
Platts had extensive coverage of 12 West African crude grades, six from Nigeria and six from Angola. The global energy, petrochemicals, metals and agriculture information company now also publishes 17 daily price assessments for crude oil in West Africa.
“We want to provide more transparency and increase our coverage of this market because we only see it moving in one direction, and that’s upwards in terms of not just in production but also interest globally in West African crude oil grades,” Bonnington explained.
He added that any assessment Platts does from now onwards will aim to be a true assessment of market value. Companies will be given the ability to bid an offer transparently in a market place that the company has created which allows their price assessment process to function.
“By just assessing these new grades, we’re already producing a far more transparent process than currently exists and any company is able really demonstrate where the price is by being part of our assessment process for these new oil grades,” said Bonnington.
The US’s recent discovery of shale oil and subsequent production has however sparked fears of a drop in demand for Nigeria’s crude oil from emerging economies.
“The key question at the moment for Nigerian producers is whether Indian demand and also European demand is likely to surplant the former US demand that existed. Nigerian crude oil will always find a market, whether it’s in Europe or even in the Us still, but also in India, but at what price,” he said.