In this blog Nigeria Launches New ‘Nembe’ Grade as Ramps Up Oil Output.
INTRODUCTION
Nigeria’s state oil firm said it had launched a new grade of crude called Nembe, which it says is particularly suited to the European market. One of Africa’s top producers of crude oil, OPEC member Nigeria for many years has struggled with declining production and disruptions to supply due to unrest and oil theft. The first cargoes of Nembe were sold in October, consisting of two 950,000-barrel shipments sold to France and the Netherlands, an NNPC source told Reuters on the sidelines of the Argus European Crude conference in London.
Nigeria Launches New ‘Nembe’ Grade as Ramps Up Oil Output
Nigeria’s NNPC and Aiteo have launched a new grade of crude called Nembe through a joint venture, as Africa’s largest oil producer ramps up its oil output. Crude theft, attacks on pipelines in the Niger Delta and a lack of investment have meant output declines for many years, causing a dwindling of Nigerian government revenue and large fiscal deficits. But output has picked up in recent months.
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The Nembe crude stream will be managed and marketed by a joint venture between state-owned NNPC and oil firm Aiteo Eastern E&P Co. Ltd, the companies said the first crude marketing project is solely run by Nigerian entities. The new Nembe grade is expected to add 1.9 million barrels of crude oil exports to Nigeria’s portfolio monthly, according to an NNPC press release, with first cargoes already sold in October 2023, for export to Western Europe. As a crude grade, Nembe is similar to Nigeria’s low-sulfur, distillate-rich grades, which go for a premium to Brent crude and are suitable for European refiners.
NNPC stated that “the Nembe crude oil grade also has a low sulphur content and low carbon footprint due to flare gas elimination, fitting perfectly into the required spec of major buyers in Europe.” Nembe crude has previously been produced, though not as a separate grade until now In previous years, Nembe went through the Nembe Creek Trunk Line along with Nigeria’s Bonny Light grade, but attacks on pipelines in the Niger Delta sidelined production.
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The announcement of the new crude oil grade coincides with the start of operations of Nigeria’s new Nembe Crude Oil Export Terminal (NCOET), a floating storage and offloading vessel with a storage capacity of 2 million barrels. With a loading capacity of 25,000 barrels per hour, the new terminal will be exporting over 3.6 million barrels of crude per month once operating at full scale.
According to NNPC a survey showed Nigeria produces roughly about 1.5 million barrels per day (bpd), but the country hopes to ramp up production to about 1.7 million bpd, a second. Nembe production sits at about 50,000 barrels per day, with the NNPC eyeing a ramp-up to 80,000 bpd by Q1 2024 and 150,000 bpd by 2025. In October, Reuters published a survey showing that total Nigerian oil production was at around 1.5 million bpd, up from 1.39 million bpd the month prior. The goal, a Nigerian source told Reuters, is to reach 1.8 million bpd by the end of this year.