Petroleum Africa
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Friday, May 19, 2006
ExxonMobil is having trouble getting buyers for the latest addition to the West African oil market, its Nigerian crude Erha. According to traders Erha crude is taking time to build up a regular list of buyers. Exxon started pumping from the $1.1 billion offshore field in March. The five cargoes loading in June have yet to all find buyers, while most West African cargoes for June are already sold, traders said.
"It’s a new grade and they always have a period before they establish themselves," said one. "There’s an introductory period, and people want to see stable production and then it takes time to build up a base of buyers." Erha has an API gravity of 32.8 and a sulphur content of 0.21%, making it a lighter crude that is prized for refining into gasoline and diesel. But oil refiners often view the entry of new crude in the market with suspicion, as even small changes in qualities can cause costly processing problems.
Output from Erha has climbed to more than 100,000 bpd, and the field was the main reason for a rise in Nigerian supply to 2.09 million bpd in April that took OPEC’s collective output to its highest this year.
"It’s very high risk to run a crude on the basis of a pre-production assay in the belief it’s going to be exactly the same," a trader said. "It might well be, but it’s very high risk."
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