While Nigeria, Africa’s largest oil producer, continues to grapple with production and export challenges, Iran is experiencing a significant rebound in its oil exports.
Oil production increased by only 18,000 barrels per day in the first quarter of the year to 3.188 million barrels per day (mbd), compared to the last quarter, indicating a mere 0.5percent growth in quarterly production, according to OPEC.
The country’s oil production growth has slowed dramatically since last summer.
Due to the sale of tens of millions of barrels from floating storage, Iran’s oil exports increased significantly in 1Q24 to 1.5 mbpd, according to estimates by Kpler which provides real-time data on global commodity movements.
After the United States imposed sanctions on Iran’s oil exports in 2018, the country’s oil exports declined from 2.6 mbpd to 330,000 barrels by late 2019 – leading to the stockpiling of about 110 million barrels of unsold oil on both water and land.
During President Joe Biden’s administration, however, the Islamic Republic was able to increase oil exports to its only customers: China and Syria.
Last year for instance, Iran exported about 1.3 mbd of crude oil and gas condensate, 48 percent more than the previous year – of which 95 percent went to Chinese independent small refineries, called “teapots”.
A senior expert at Kpler told Iran International that the volume reached 1.5 mb/d in January-March 2024.
Kpler’s data indicates a significant increase in Iran’s oil exports during the first half of 2023, followed by a slight decline in the latter half of the year. Export growth then picked up again in the first quarter of 2024, although OPEC data suggested only a marginal increase in production levels.
The significant quarterly increase in exports by 140,000 b/d, despite a production growth of only 18,000 barrels in 1Q24, can be attributed to Iran selling more than 16 million barrels from floating storage during January-March 2024.
The process of oil transferring from Iran to China typically takes about three to four weeks.
According to Kpler’s statistics, Iran’s floating oil storage decreased from 26.5 million barrels in early December 2023 to 10 million barrels in early February 2024.
Iran’s oil export volume increased by 44% in the last Iranian fiscal year, ending on March 19, despite a 17percent decrease in global oil prices. However, the country’s customs statistics indicate that oil export revenues only grew by 8percent during this period.
According to Iranian customs data, the total value of oil and oil products (including mazut) exported by Iran amounted to $36 billion in the last fiscal year.
But, considering Iran’s export levels of 1.3 million barrels per day (mb/d) of crude oil and gas condensate, along with 0.2 mbpd of mazut, and factoring in global oil prices, Iran’s total oil export revenues should have exceeded $44 billion.
This suggests that approximately 19 percent of Iran’s oil revenues were lost due to factors such as expenses related to bypassing US sanctions, including middlemen costs, ship-to-ship operations, and direct discounts offered to Chinese refineries.
Iran offered Chinese “teapots” approximately $13 per barrel in 2023 to maintain its market share, Reuters reported.
Additionally, the head of the Budget and Planning and Auditory Commission of the Iranian parliament stated on April 13 that Iran imported $2 billion worth of gasoline during the last fiscal year to compensate for fuel shortages.
Iran began importing gasoline in March, primarily from Russia and neighboring Southern countries.
For Nigeria, however, the storyline is different.
While Nigeria boasts vast reserves, its long-standing issues are proving to be a turn-off for some companies.
“Perhaps, the oil majors are going to other countries, which is becoming an emerging frontier. Maybe, it is a lot easier for them to do business there because the above-ground risk is probably a lot easier to deal with in those regions as opposed to Nigeria,” Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies said.
A string of forced departures by global oil and gas players whose entry into Nigeria was highly celebrated is clear evidence that rather than attract badly needed investment, Nigeria’s oil industry is not even placed to play catch-up any longer.
French oil major TotalEnergies is moving to invest $600 million to strengthen exploration and production activities in the Republic of Congo in 2024, snubbing the Nigerian oil and gas sector for the second time in quick succession.
According to the press statement seen by BusinessDay, the investment will be used to finance exploration and maintain production in the country’s deep offshore Moho Nord field.
“The $600 million investment by TotalEnergies shows that the IOC is in the Republic of Congo to stay. Congo’s oil and gas can play a much greater role in alleviating energy poverty and driving industrialisation in Africa, and partnerships with companies to the likes of TotalEnergies will be instrumental in achieving these objectives,” said NJ Ayuk, the executive chairman of the African Energy Chamber.