The demand for crude oil from Nigeria and other members of the Organisation of Petroleum Exporting Countries, OPEC,
may slip drastically as the United States begins to pump more shale oil into the global market as from next year.
Traditionally, the US is the world biggest oil importer.
The development could reduce the capacity of OPEC members to generate enough revenues for the execution of budgets and forced Nigeria and other producers to seek alternative markets in Asia.
OPEC’s July market report released yesterday said the demand for its crude will drop by 300,000 barrels per day from 29.9 million bpd to 29.6 million bpd in 2014.
The report said: “Based on the initial 2014 forecasts for world oil demand and non-OPEC supply (including OPEC NGLs), demand for OPEC crude next year is projected to average 29.6 mb/d, representing a decline of 0.3 mb/d. “Non- OPEC oil supply is expected to increase by 1.0 mb/d in 2013, supported by anticipated growth from OECD Americas, the FSU, and China.
“In 2014, non-OPEC supply is forecast to grow by 1.1 mb/d. The US, Canada, Brazil, the Sudans, Kazakhstan and Australia are expected to be the main contributors to the supply increase, while Norway, Syria, Mexico and the UK are forecast to see the largest declines.
“OPEC NGLs (natural gas liquids) and nonconventional oils are seen averaging 6 mb/d in 2014, indicating an increase of 0.1 mb/d over the current year.”
It added that world oil demand in 2014 would grow at a higher rate of 1.0 mb/d to average 90.7 mb/d, representing about 0.3 mb/d rise from the growth predicted for the current year.
“In 2014, non-OECD countries are projected to lead oil demand growth with 1.2 mb/d, while OECD consumption is seen continuing to decline but at a lower rate, contracting by 0.2 mb/d.
“The pace of recovery in growth in major economies around the globe is one of the main uncertainties affecting world oil demand projections in 2014.”
The report maintained that emerging economies continue to expand at levels below the high rates seen in past years. China’s growth is expected to remain at 7.7 per cent in 2014, in line with the revised estimated figure for this year, due to a decline in total investments, offset to some degree by rising net exports.
Despite the expected growth and rise in demand, OPEC stated that increased supplies from the United States would reduce the market share of its members, including Nigeria.
The celebrated advent of the United States shale oil has already generated a lot of reactions in Nigeria and overseas.
The Nigerian National Petroleum Corporation, NNPC, has already admitted that the increasing development of shale oil, which is usually recovered from rock formations using hydraulic fracturing or horizontal drilling techniques, constituted a major source of worry to the nation’s oil and gas industry.
The NNPC Group Managing Director, Mr. Andrew Yakubu, had stated recently that while shale oil production had grown from eight to 32 per cent of US domestic requirements, imports from Nigerian LNG had dropped from three to one per cent.
The NNPC boss said Nigeria had repositioned its export strategy following the emerging threats, adding that the country had found other comfortable markets to cushion the challenges of shale gas availability.
The GMD had stated that: “There has not been any targeted exploration of shale gas in Nigeria, but we have reliable geological information that Nigeria has the potential of having 600 tcf of gas among which is expected to be shale gas.
“So, really we are not nervous about shale gas and we believe that in addition to the current resources, we have significant potential of also being part of the global scene in terms of energy mix should shale gas decide to pose a threat.”
Yakubu, however, said that the Federal Government was not jittery of being displaced in the global energy mix by the shale oil.
The NNPC boss had said: “We are conversant with the fact that shale gas in future will require very high technical course because of the depletion rate in the reservoirs compared to oil and gas.”