Femi Asu with agency report
Weak demand for Nigerian crude oil has caused the number of ships without cargoes to rise to levels not seen in recent times.
As a result, the cost of sending crude oil cargoes from West Africa to Northwest Europe on Suezmaxes has dropped to the lowest level in over 14 years, according to Platts data.
The continued force majeure on three Nigerian crude oil grades – Forcados, Qua Iboe and Brass River – has substantially curbed demand for Suezmaxes in the region in recent months, and caused the WAF tonnage list to swell to levels rarely seen by veteran market participants.
Suezmaxes are medium to large-sized ships with a deadweight tonnage of between 120,000 and 200,000. They are the largest marine vessels that meet the restrictions of the Suez Canal, and are capable of transiting the canal in a laden condition.
According to one shipbroker’s position list, there were 32 ships available prior to the start of the current fixing window, versus a three-month average of 14.8 ships. There were also 29 ships that were free of cargo, which could make the WAF fixing window.
The number of ships means that each cargo that is shown to multiple owners attracts multiple offers and allows charterers to drive freight rates downwards.
The WAF-UK Continent route basis 130,000 mt was assessed five points lower at Worldscale 35 on Wednesday. This equates to $5.05/mt, which is the lowest since a $3.95/mt assessment on June 21, 2002.
This came after BP was heard to have placed the Ottoman Tenacity on subjects at w35 for an Angola-Rotterdam voyage on August 27.
Meanwhile, ExxonMobil is said to be working on a plan to export Qua Iboe crude oil, Nigeria’s largest export stream, via an alternate pipeline, while it repairs damage to the main export line sustained in July, sources told Reuters.
The crude oil grade has been under force majeure since mid-July, when the company said it detected a “system anomaly” on the subsea pipeline.
Sources were quoted to have said that the company later found substantial damage that would take at least one to two months to repair, spurring the decision to try to export via a second, smaller pipeline that also feeds the platform.
“We’re continuing to make progress, but we would not speculate on a timeline for repairs,” an Exxon spokesman said, without commenting on the plan to use an alternative pipeline.
The nation’s oil production has been affected by militant action since the beginning of the year, with the Nigerian National Petroleum Corporation saying pipeline attacks have taken out some 700,000 barrels per day from production that is typically just above two million bpd.
“Exxon is preparing the alternate export line,” one source said, adding that if it was successful, some exports could emerge within two weeks.
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Two sources added that Exxon, and the Qua Iboe terminal itself, were not sharing details on the repair progress or export plans for fear of provoking militant attacks on oil infrastructure.
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