India, China, France, Netherlands and the United Kingdom bought a total of 24.4 million barrels of crude oil from Nigeria in May this year, almost half of the nation’s total exports for the month, the latest data from the Nigerian National Petroleum Corporation showed.
But the countries are now pushing ahead with plans to stop the use of oil-powered vehicles as part of efforts to reduce pollution and carbon emissions, a development that could spell trouble for Nigeria’s oil exports in the coming decades.
According to the NNPC, India bought 7.673 million barrels of Nigerian crude in May; France imported 4.783 million barrels; the UK bought 6.016 million barrels; Netherlands, 3.96 million barrels; and China, 1.95 million barrels.
In July, the UK followed France in announcing that new diesel and petrol cars would be banned by 2040 in a bid to encourage people to switch to electric and hybrid vehicles.
Netherlands has mooted a 2025 ban for diesel and petrol cars, while Germany, another major buyer of Nigerian crude in Europe, aims to have one million electric cars on the road by 2020.
India, the biggest importer of Nigeria’s crude, is considering even more radical action, with plans to support electrifying all vehicles in the country by 2030.
“We are going to introduce electric vehicles in a very big way. We are going to make electric vehicles self-sufficient like UJALA. The idea is that by 2030, not a single petrol or diesel car should be sold in the country,” the then Power Minister, Piyush Goyal, said in April.
Earlier this month, China announced that it was looking to ban the production and sale of diesel and petrol cars and vans.
Energy specialists at Ecobank Capital said if more countries followed the same path, the development could translate to a structural shock to crude oil demand globally, especially in developed countries.
They said countries with excessive dependence on crude oil revenue would experience some prolonged economic shocks from gradual moderation in crude oil demand.
“While the shift to electric/hybrid cars casts a major cloud over an already challenged crude oil market, the impact on oil producing countries in middle Africa could be much worse,” said the Vice President/Head, Energy Research, Ecobank, Mr. Dolapo Oni.
“Countries like Nigeria and Angola, which have paid lip service to diversification, will either have to credibly implement structural reforms or be forced to take action as government’s income dwindles.”
He said middle African countries could look inwards for demand as vast opportunity would continue to exist in the domestic markets.
According to Oni, if Nigeria refines all its crude oil, it can comfortably supply the entire West Africa and wider Gulf of Guinea countries.
Bloomberg New Energy Finance, in a recent report, forecast that electric powered vehicles will be cheaper to buy than their internal combustion engine counterparts by 2025.
It also predicted that by 2040, there would be 530 million electric vehicles on earth, comprising about one third of the fleet, which would displace roughly eight million barrels of oil production per day.
Morgan Stanley, the US investment banking giant, predicted last month that there would be more than one billion electric vehicles on the road by 2050.
Norway, which has the most electric vehicles per capita in the world, wants to move to electric-only vehicles by 2025.
“Nigeria is not prepared for this shift politically, socially and economically,” said a petroleum engineer and energy expert, Mr. Bala Zakka.
He said the country failed to internally build capacity and capabilities to enjoy the benefits of its natural endowments, adding, “We refused to broaden the opportunities and ancillary services that are associated with the crude oil and natural gas.
“We refused to encourage the inflow and domiciliation of technical ability to develop ourselves internally and contribute to the internal aggregate value of our economy.”
Sales of battery-powered cars soared 38 per cent in the first quarter of this year after models including Renault SA’s improved Zoe won buyers in Germany and Spain, according to Bloomberg.
Among Europe’s top five car markets, battery-powered vehicle sales growth was strongest in Germany, where registrations more than doubled to 5,060 from 2,332; the UK, with a gain of 47 per cent; and Spain, with 45 per cent.
Manufacturers including Germany’s Volkswagen AG, BMW AG and Daimler AG are racing to widen their line-up of electric cars to meet tougher emissions rules and provide an alternative to polluting diesels tarnished by the VW scandal.
The Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, in a telephone interview with our correspondent, said the development would force Nigeria to look more inwards into utilisation of crude oil for the production of other products.
He said, “You know the entire business is dynamic; it’s dynamic in the sense that as more customers are coming from a particular region, other countries will also be demanding for the products, and equally developing countries will be looking for other possibilities of utilising their products and raw materials.
“But as we speak now, even the demand for Nigeria’s crude oil is oversubscribed. We have more buyers demanding for our crude oil than what we can supply to them.”
Ughamadu noted that Netherlands was in the NNPC headquarters a few weeks ago in connection with petroleum resources, saying, “They want to collaborate with the NNPC towards utilising petroleum products for the production of animal feeds. So, more innovations will come up towards utilising the raw materials.”
The Organisation of Petroleum Exporting Countries, in its latest monthly oil market report, noted that worldwide sales of electric vehicles were up by 42 per cent in the year to June 2017, according to data from Inside EVs.
It said, “In absolute numbers, the ratio of electric vehicles in 2016 globally is still very small, with a share of 0.9 per cent in the US, while in Europe EVs made up a total of around 1.5 per cent of all new passenger car registrations over the same period.
“In Asia, China showed an impressive 500,000 new EV registrations in 2016. However, this still only amounts to 1.8 per cent of total new vehicle registrations. China remains the largest market for the EVs globally, with an increase of 42 per cent in the sale of plug-in passenger cars in the first half of 2017 over the same period a year earlier.”
OPEC also noted that several global automakers had recently announced that they would intensify the development of hybrid and electric vehicles in an effort to further reduce carbon emissions.
© 2021 Nigerian Canadian Newspaper Canada. Powered by NASCI.