Nigeria has been particularly affected by the dramatic increase in US production of shale oil, which is also known as light, tight oil and with which exporters of light sweet crude are now having to compete in the US market.
In its annual World Oil Outlook last month, OPEC said it expected demand for crude produced by its 12 member countries to fall by 1.1 million b/d over the next five years and to remain below 30 million b/d through 2020 alongside steadily rising non-OPEC supply driven by the shale revolution.
According to Platts the cartel expects US shale oil to account for half of the 4 million b/d projected cumulative increase in non-OPEC output over the next few years to 2018.
Several ministers before the last week meeting of the organisation have said they expect an agreement to maintain OPEC’s current 30 million barrels per day (b/d) ceiling into 2014.
In line with this thought, Nigeria through her oil minister Diezani Alison-Madueke actively her supported a rollover of OPEC’s current 30 million b/d crude output ceiling, at least for the next few months until the oil producer group’s next meeting.
Alison-Madueke also said she was keen to see how OPEC saw the impact of the US shale oil and gas boom on OPEC.
“We would like to see that we continue with volumes we have held for the last year or so at least between now and the next meeting. I think that would be a good thing,” she said.
“We would like to see a review of the situation referencing the shale oil and gas to see where we are at this stage as OPEC among other things,” she added.
The evolution of shale had caused Nigerian oil export to the US to diminish from about one million barrels per day in December 2009 to less than 352,000 barrels per day as at February 2013.
“This amounts to about 70 percent loss of the US market from a region that was the largest importer of Nigeria’s crude oil,” he explained.
OPEC sometime ago alerted its members about the significant impact of shale gas on the cartel’s crude oil production.
This was contained in the organisation’s 2013 World Oil Outlook which was recently released.
By implication, Nigeria’s crude oil export and her economy faces serious threat because of the sweet nature of the commodity which is comparable to Nigeria’s bonny light.
OPEC in its 2013 World Oil Outlook considers shale oil and gas sufficiently important to devote large chunks of its report to a discussion of “matters arising” from this new energy source.
Eddy Wikina, managing director of Treasure Energy Resources and former external affairs manager at Shell Nigeria Exploration and Production, SNEPCO, said that it is no longer news that shale gas and oil would impact negatively on the Nigerian Crude oil production.
“It is going to affect the global marketability of Nigerian export market,” he said. Nigeria supply the world sweet crude which used to be the preference for some parts of America before the discovery of shale gas in the United State.
Shale oil’s low sulfur content positions it as a direct competitor to the Bonny Light. The sulphur content of North America crude is expected to decrease from about 1.2% in 2010 to 1.05% in 2018 as sweet crude production from US shale increases.