Lagos – Nigeria is worried about the effect that the United States’ discovery of more shale oil will have on Nigeria's oil revenue.
This follows a report by the Energy Information Administration (EIA), the Energy Department’s statistical arm of the United Sates government, showing domestic crude oil production from shale 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.
The Nigerian National Petroleum Corporation (NNPC) raised concern over the development, saying it posed a great concern to the country and other African oil producers.
Omar Farouk, General Manager of Media Relations: Group Public Affairs, said the countries risked a situation where the United States could venture into territories Nigeria was currently supplying.
He feared America was going to offer to sell oil to some countries at marginally higher price which those markets will accept.
“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 might also want to find a market outside. And that market may also be a market that Nigeria is selling to,” said Farouk
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.
“The reason is because they know that if they go into agreement with America, the chances of the oil companies there declaring are very slim, and they are assured of guaranteed supply with more flexibility,” said Farouk.
The Nigerian economy is heavily dependent on the oil sector, which accounts for more than 95 percent of export earnings and about 40 percent of government revenues.
– CAJ News