The Nigerian National Petroleum Company Limited (NNPCL) will start pricing crude supplies against dated Brent crude in 2024. This is according to a December 5 Bloomberg report.
As per the report, NNPCL plans to change how it prices its crude cargoes starting in January 2024.
A company circular mentioned by Bloomberg outlined that NNPCL will shift its pricing method, moving from basing prices on the average settlement of Dated Brent in the five days following loading to using the monthly average of Dated Brent, the physical-crude benchmark.
Bloomberg’s report highlighted that this adjustment might introduce higher risk factors to the country’s crude supplies.
According to oil market traders mentioned in the report, this shift in pricing strategy could potentially expose the cargoes to increased volatility like the fluctuations observed in broader oil markets.
The change in approach might necessitate a greater reliance on hedging strategies due to the less precise timeframe that will be used for pricing the cargo.
A part of the Bloomberg stated:
The status quo
The Nigerian government has plans to attract more upstream oil investments into the country and the plan is three-pronged in nature – fighting crude oil theft to increase production (new quota from the Organization of Petroleum Exporting Countries, OPEC is at 1.5 million barrels per day), engaging local communities in the Niger Delta to develop the region and provide employment alternatives for the young population in the Niger Delta as a way to deflate crude oil theft attractiveness.
An oil industry analyst who spoke to Nairametrics on Tuesday on the condition of anonymity said that although Nigeria is a top oil producer in Africa, it is also a legacy producer in the African oil industry, while there are newer oil markets on the continent which many international oil companies find attractive and this has led to the divestment of assets by companies like Equinor in the recent past.
So, the country cannot afford to add more risk to its oil market through supply pricing, especially now that the country is looking to become a net exporter of petroleum products due to the planned resuscitation of its local refineries by the end of 2024 as well as the planned startup of the 650,000 barrels per day Dangote refinery.
The Nigerian Government has taken legal action against the Chairman of Zinox Group, Leo Stan…
Nigeria striker Ademola Lookman said that switching his playing nationality from England to the Super…
Popular Nollywood actress Seyi Edun has extended an olive branch to her colleague and husband’s…
The Catholic Bishop of Sokoto Diocese, Matthew Kukah, has claimed that there is a lack…
Prophet Odumeje has made a bold and unapologetic declaration about the authenticity of the miracles…
Nigerian comedian cum filmmaker, Ayo Makun, better known as AY, has clarified the claims of taking…