The Nigerian National Petroleum Corporation (NNPC) Ltd announced on Tuesday the introduction of a new crude grade named Nembe as part of Nigeria’s efforts to increase crude oil production. Africa’s largest oil producer has been grappling with declining output due to issues like crude theft, pipeline attacks in the Niger Delta, and underinvestment, leading to reduced government revenue and substantial fiscal deficits. However, there has been a recent uptick in production.
The Nembe crude was initially incorporated into the Bonny Light stream over three years ago, but incidents of sabotage on the Nembe Creek Trunk Line (NCTL) had hampered output, an NNPC source disclosed to Reuters on the sidelines of the Argus European Crude conference in London. Presently, Nigeria has successfully reinstated Nembe as a distinct crude grade.
The first shipments of Nembe were sold in October, comprising two 950,000-barrel shipments, which were purchased by France and the Netherlands, according to a second NNPC source who spoke to Reuters.
The initial Nembe cargo was acquired by UAE-based trading firm Gulf Transport & Trading, which loaded the cargo onto the Suezmax tanker Maran Orpheus for a journey to an undisclosed end buyer in Fos, France, an insider familiar with the matter informed Reuters.
Maryamu Idris, the Executive Director of Crude and Condensate at NNPC Trading, described Nembe as being similar to Nigeria’s other distillate-rich grades such as Forcados, Bonga, and Egina during the conference.
Nembe, characterised as a low-sulfur grade, commands a premium compared to the global Brent benchmark and is poised to compete with Brazilian and Azeri crude grades for European refiners, she added.
Currently, Nembe production stands at approximately 50,000 barrels per day, with NNPC aiming to raise it to 80,000 barrels per day by the first quarter of the next year and 150,000 barrels per day by the start of 2025, as per the source.
A Reuters survey in October indicated that Nigeria produces around 1.5 million barrels per day (bpd), up from 1.39 million bpd in September, in accordance with OPEC figures. However, the nation aspires to increase production to about 1.8 million bpd by the end of 2023, according to a third NNPC source.
Recently, sources revealed that NNPC was preparing to provide the highly anticipated Dangote oil refinery with up to six crude oil cargoes in December for test runs. Nigeria, due to inadequate capacity and poor maintenance, imports almost all its refined fuel requirements, and it now places its hopes of ending fuel imports on the 650,000 bpd refinery being constructed by Aliko Dangote, Africa’s wealthiest individual.
The refinery is expected to process crudes with an API gravity of 29 to 34 degrees, stated the first NNPC source. API gravity is an indicator of crude oil density, typically within the range of 15 and 45 degrees. A higher API suggests a lighter, less dense crude, and Nembe carries an API gravity of 29, the source added.