Nigeria’s Bonny crude exports to hit 2-year high-trade

By Omo GABRIEL & Yemie ADEOYE, with Agency reports
EXPORTS of Nigeria’s benchmark Bonny Light crude oil were expected to average 285,000 barrels per day (bpd) in November, up from 245,000 bpd planned in October and the highest volume since early 2008, traders said.

Bonny Light crude oil production has long been hampered by militant sabotage on vulnerable oil facilities in the oil-rich Niger Delta region but operator Royal Dutch Shell (RDSa.L: Quote) has been mounting a greater effort to repair damaged infrastructure.

Repairs to sabotaged oil facilities in the Niger Delta will help to push exports of Nigeria’s benchmark crude oil to the highest since early-2008, trade sources said on Friday.

According to preliminary loading programmes, Bonny Light output will average 285,000 barrels per day (bpd) in November, up from 245,000 bpd planned in October and recovering from below 130,000 bpd earlier this year. Production of the gasoline-rich crude has long been hampered by militant sabotage on vulnerable pipelines and platforms in the Niger Delta region, the heartland of Africa’s biggest oil and gas industry.

Bonny Light production reached a peak of nearly 500,000 bpd in 2005 when it accounted for nearly one-fifth of the total crude output from Africa’s most populous nation.

Major leakages in 2006 and intensified sabotage attacks from mid-2008 pulled back production and operator Royal Dutch Shell has struggled to recapture prior output levels ever since.

But a government amnesty last year, which saw thousands of former militants hand over weapons in return for clemency, brought a halt to attacks, encouraging Shell to repair damaged infrastructure and build a new pipeline.

The Anglo-Dutch firm said the pipeline was part of an ongoing programme to keep its facilities well-maintained in the Niger Delta, one of the world’s largest wetlands where decades of oil extraction have left land and water polluted.

“We saw signs in the October plans that Bonny production was rising and November schedules confirm it…this is probably a result of the pipeline and work Shell has been doing,” one trader of physical West African crude said. November shipping schedules for most of the major Nigerian crude oil streams emerged, showing total exports for the month will exceed 2 million bpd for the fifth month running, according to Reuters data.

Meanwhile Nigerian crude oil differentials were assessed at weaker levels on Friday as loading programmes emerged adding to the already ample physical crude supplies in the region. Weak U.S. demand for West African and Mediterranean crude has created a supply glut, pressuring differentials for most light grades. A cancelled Indian buying tender also weighed on West African crude values.

* Benchmark Qua Iboe was assessed at dated Brent plus $1.40 to $1.50, weakening by 10-20 cents from recent deals.

* According to preliminary loading programmes, Bonny Light output will average 285,000 barrels per day (bpd) in November, up from 245,000 bpd planned in October. This was the highest volume since early 2008,]

* November shipping schedules for most of the major Nigerian crude oil streams emerged, showing total exports for the month will exceed 2 million bpd for the fifth month running.

Meanwhile Light, sweet November crude settled higher during the week after gasoline futures rose on news of a major refinery shutdown. Positive reports for economic recovery also contributed to the rebound this week.

Front-month oil prices increased 47 cents, settling at $75.18 a barrel on the New York Mercantile Exchange. ConocoPhillips halted operations at a New Jersey refinery to install new equipment. The refinery, which processes 238,000 barrels a day, is expected to restart Nov. 4. Analysts claim the refinery shutdown pressured gasoline prices but are unsure of its future effect.

The Conference Board reported an increase in its index of leading economic indicators—the most since May. Additionally, the National Association of Realtors said the number of previously owned homes increased 7.6 percent last month after reaching record lows in July.

Meanwhile, initial unemployment claims rose 12,000 to 465,000 for the week ended Sept. 18, according to the U.S. Labor Department. An increase in jobless claims contributes to lower fuel demand.