The effects of the new era of energy sources may have hit hard on Nigeria’s export market, as the nation’s crude differentials and demand at the international market dropped to the lowest ebb in the past two years.

Specifically, a large quantity of Nigerian crude oil cargoes for August export has remained unsold, even as September loading schedule was released to market, thereby increasing pressure on already weakened differentials.

Reports showed that about 20 or 25 Nigerian cargoes were still on sale out of a total of 65 for August export. Traders said that this was the biggest supply glut they had seen for years and that sellers may be forced to keep differentials at multi-year low to attract buyers.

“With the August cargo overhang going into the new September trading cycle, it’s hard to see any upside in grade differentials, especially for Nigerian grades,” a trader said.

The decline state was linked to the emergence of shale oil in the major oil importer nations such as the United States, and some Asian countries.

Other observers believed that the return of Libyan crude to the market was also weighing heavily on prices. The 340,000 barrel-per-day El Sharara oilfield resumed operations after protesters ended a four-month strike.

A trader was differ in opinion, stating that freight costs for suezmax-sized vessels were also acting as a deterrent to European buyers, who would look to buy cargoes from nearer destinations such as the North Sea or Mediterranean.

“Freight has gone crazy, so people who are buying for later dates will wait in hope that prices will fall,” the trader said.

However, the preliminary loading schedule for September showed that Nigeria’s Qua Iboe crude stream will load 380,000 barrels per day (bpd) including two cargoes deferred from August. The programme was revised down from an initially planned 398,000 bpd in August.

Excluding the deferrals, Nigeria will export 10 cargoes carrying some 317,000 bpd of the benchmark grade in September. Other grades on the list including Bonny Light and Forcados were broadly in line with levels from last month.

September cargoes to emerge so far includes, Bonny Light: six cargoes, (167,000 bpd), Forcados: seven cargoes, (225,000 bpd), and Bonga: four cargoes, (133,000 bpd).

Traders said they would assess levels for September cargoes in the region of $1.20 over dated Brent, though offers had yet to emerge.

Royal Dutch Shell has yet to lift a force majeure on output from its EA field, which was declared in June, a spokesman for the company said on Tuesday.

Nigeria’s crude oil production averaged 2.26 million b/d in the first quarter of this year, bolstering the country’s economic growth rate to 6.21 per cent during period, according to data released by the National Bureau of Statistics.

Oil output was 30,000 b/d lower than average production of 2.29 million b/d in the corresponding period last year, but it was higher than the 1.87 million b/d at the end of 2013, according to the data.

“As a result, the growth rate of real GDP was recorded at 6.21 per cent in Q1 2014, higher than 4.45 per cent recorded in the corresponding quarter of 2013,” the agency added.

The statistics office said it expects the economy to grow by 6.19 per cent in 2014, up from 5.5 per cent last year, on the back of rising oil output.

The Group Managing Director, Nigerian National Petroleum Corporation, Andrew Yakubu, said the country’s oil production was presently at over 2.3 million bpd, and expected to rise further as the government clamps down on oil theft and sabotage attacks on production facilities.

Meanwhile, the Society of Petroleum Engineers (SPE) Nigeria has recently highlighted the imperative for the country to focus on better utilisation of its vast natural resources within the country, in view of the recent shrinking of international market for crude.

The Chairman, SPE Nigeria Council, Bernard Oboarekpe, said: “Where we export our crude oil to is changing. The United States (US) does not import from Nigeria as it used to in the past. So, we are now looking for new markets. Also, there are new oil and gas discoveries in other African countries and it means that we cannot continue to do business as usual. Things have got to change.

“If we grow our oil production only to export almost everything, then we cannot produce much value to the country. And of course, the export market is being challenged and so we have to look for other ways to create value.

“If the export market for crude oil were to dry up, what are we going to do? This is the time for us to think about how to convert the natural resources in the country into useful products. With the population we have and a growing economy, we can create more wealth within the country.”

•Adapted from a Guardian report. Photo shows Petroleum Minister Diezani Alison-Madueke.