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In a recent article, we showed how oil trading works. Nigeria is famous for raw materials such as coal, iron ore, tin ore, rare metals, lead, zinc, etc. However, a small number of people know that Nigeria is a significant oil exporter.
What type of crude oil is in Nigeria?
Nigeria exports crude oil classified as “light” and “sweet” because this petroleum is mainly free of sulfur. As a result, Nigeria represents the largest producer of sweet crude oil in OPEC. Nigerian sweet crude oil has a composition very similar to petroleum extracted from the North Sea.
Is Nigeria Crude Oil Brent?
Yes, Nigeria Crude Oil is Brent crude oil. However, Nigerian Qua-Iboe Brent Crude is graded as a “light” “sweet” crude oil mined by Exxon-Mobil in the Akwa-Ibom state of Nigeria. Therefore, Nigerian Brent crude oil is mainly free of sulfur, called “Bonny light” crude oil.
Brent Crude Oil is an international bench that mainly deals with crude oil pricing. Its main task is to price the world’s global crude oil supplies. Moreover, Brent Crude is well known for being sweet and lightweight features. This pricing standard of crude oil is in the UK. The pricing benchmark located in the USA is mainly known as the West Texas Intermediate (WTI).
These oil prices are regarded as the benchmark crude oil that is where you can always refer each time you need to quote the price of the barrel.
Depending on several factors such as desirability, different premiums or discounts can be placed on any of the above types of crude oil. You can benchmark those types that are predictable. This is never similar to having a whole list of varied grades of crude oil that need updates whenever the price and demand changes. Ideally, Nigeria is well known for other grades of crude oil. Brass River Crude Oil, Qua Oboe crude oil, and Forcados.
Bonny Light Crude Oil or BLCO represents a high-quality crude oil produced in Nigeria in the Niger Delta basin. This high-grade crude oil source is the Nigeria National Petroleum Corporation (NNPC).
Most refineries are located in Warri, Port Harcourt, and Kaduna. Nigeria produces around 2 million oil barrels per day, and it is ranked around the 15th place in the world.
Bonny light is a highly demanded crude oil since it has a low sulfur content and does not contaminate the environment. Most American and European refineries require this high-quality crude oil because of its unique features. This makes it the primary source of income in oil-rich nations.
BLCO is the best crude oil that is well known to yield a higher amount of diesel, gasoline, fuel, and so on. The leading importers of BLCO include Togo, South Africa, India, USA, Netherlands, France, Spain, Cote D’Ivoire, Uruguay, Argentina, and Uruguay.
What is the density of Bonny light crude oil?
Bonny’s light crude oil density at 15 C is around 850 kg/m3. Usually, light crude oil has a density of less than 900 kg/m3.
Features of Bonny Light Crude Oil
- Higher API gravity
API is the American Petroleum Institute and is the index used to check the density of crude oil and other refined materials. Crude oil usually has an API that ranges between 15-45 degrees. Crude oil with a higher API means that it has a lower density and is thus lighter. A more downward API signifies higher density, therefore, heavier. Lighter crude oil with higher API is considered valuable because it manufactures high-value products as they run through a refinery. Lighter crude oil has an API between 35-45. For example, BLCO has an API of 32.9. Most refineries prefer this one that has a higher API because of its value and the profits they are likely to get from this. This makes BLCO one of the best crude oil in the entire globe.
- Lower sulfur content
BLCO has lower sulfur contents, making it less corrosive on refinery equipment and infrastructure. It is highly in demand because its by-products do not severely impact the environment. This makes it safer in our surroundings. Its sulfur content is less than 1%, thus ranging between 0.14%-0.16%. This is why most refiners prefer this kind of crude oil to avoid damaging the environment.
- Better gasoline yields
BLCO is well known for its good gasoline yields. Gasoline is one of the petroleum products that is processed from crude oil. Therefore, most refiners try their best to maximize the production of gas, fuel, and diesel because it is a highly valued product to earn more profit.
Is crude oil a curse or blessing to Nigeria?
Reasons, why crude oil is a blessing to Nigeria are that oil export increases government revenues, increases export earnings, linkage effects in the economy enable country improvement, and opens up development opportunities.
In the latest report in 2022, Nigerian oil export contributes around 90 percent of Nigeria’s export earnings and approximately 80 percent of the Federal Government’s revenue. However, during oil exploration in the Niger Delta area, environmental pollution arises from oil prospecting. Pollution is a curse for Nigeria and can negatively impact the biodiversity of the affected areas.
Bonny light crude oil price
Crude Oil live chart:
Bonny light crude oil buyers
The biggest Nigerian light crude oil buyers are Togo, South Africa, India, USA, Netherlands, France, Spain, Cote D’Ivoire, Uruguay, Argentina, and Uruguay.
Bonny light crude oil buyers in Europe
Bonny light crude oil buyers in Europe are the most Netherlands, France, and Spain while the biggest European Bonny light crude oil import companies are :
- Statoil ASA
- Rubis SCA
- Engie SA
- Motor Oil Hellas Corinth Refineries SA
- Hellenic Petroleum SA
Bonny light crude oil buyers in the USA
- Baker Hughes Inc
- Phelps Dodge Corporation
- Tesoro Corporation
- Seadrill Limited
- Western Refining, Inc.
Bonny light crude oil buyers in China
- Shenzhen Gas Corp Ltd
- Offshore Oil Engineering Co Ltd
- Andatee China Marine Fuel Services Corp
- Inner Mongolia Yitai Coal Co Ltd
- China Petroleum & Chemical Corp
Bonny light crude oil buyers in the Middle East
- Polarcus Ltd
- KADI PETROLEUM
- Synergy Petroleum International
- Lapidoth-Heletz LP
- Elma Petroleum
What is Bonny light crude oil used for?
Bonny light oil is used for refining into gasoline, diesel, and aviation fuels. In addition, however, people use bonny light oil in folklore medicine, such as applying it on their burnt skin, rotten foot, and leg ulcers.
Why is Nigerian crude oil light?
Nigerian crude oil is light because it is low density and flows freely at room temperature. Light Nigerian oil, Bonny light, low specific gravity, low viscosity, and high API gravity due to a high proportion of light hydrocarbon.
This “light” characteristic of oil is outstanding. Light crude oil usually can get a higher price than heavy crude oil because it produces a higher percentage of gasoline and diesel fuel during production.
Why is Nigeria oil called sweet oil?
Nigeria oil “Bonny light” is called sweet oil because of the low level of sulfur that usually provides a sweet taste and pleasant smell. In the past, during 19. century, prospectors didn’t have instruments, and it was tough to rank oil quality. However, prospectors used to taste and smell small quantities of oil to determine oil quality, so we have the term “sweet” today for oil.
How many crude grades does Nigeria have?
Nigeria oil can have various crude grades from 30 up to 47. Usually, the highest crude grade has Agbami crude oil (47), then Akpo (45.8), while Usan is around 30.6.
How many Litres make a barrel in Nigeria?
One barrel of Nigeria light crude oil is 42 gallons or 168 liters. Usually, standard, the 1 barrel of crude oil produces approximately 159 liters of petrol, but Nigeria’s crude oil production is higher because of density.
How much crude oil does Nigeria produce per day?
On average, Nigeria produces around 2 million barrels per day. However, in some moments, it produces up to 2.5 million barrels per day, and it is 15th ranked oil exporter country.
Factors affecting the price of Bonny Light Oil (BLCO)
There is a wide range of factors that directly impact the cost of Bonny Light Crude Oil. They include;
- OPEC stock
The OPEC nations affect the price of crude oil by either increasing or reducing crude oil production. Therefore, their decisions have a significant impact on the overall cost. On the other hand, OPEC policies are affected by the geopolitical developments in these nations.
- Mode of shipment
There are different modes of transporting BLCO. This brings about differences in how it impacts the price of BLCO. Crude oil is usually transported using tankers, trucks, overland, railroads, barges, etc.
- The required volume of crude oil
The amount of crude oil that is in demand will affect the overall price of the crude. Higher demand increases the price of crude oil.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
