Oil giant, Chevron has signed a deal with Indian State-run Bharat Petroleum Corporation (BPCL) to buy 10,000 barrels per day (bpd) of Nigeria’s light sweet crude grade.
But Reuters reported that the deal, which is for the year ending March 2013, entails that Chevron will supply barrels of light sweet crude to the Indian company at the official selling price.
BPCL normally buys West African crude on the spot market. “This is the first time that BPCL has signed a contract for Nigerian oil”, the newswire quoted a source privy to the deal to have said. It is just a start and there is a possibility that next year BPL may look at sourcing higher volume of Nigeria oil through a term deal”, an Asian trader told Reuters.
The source noted that the Nigerian crude oil could be partial substitute for the Libyan and Algerian barrels that the Indian company used to buy under contract terms. BPCL operates the 240,000 bpd Mumbai Refinery in Western India and the 190,000bpd kochi plant Southern India.
The first quarter Trade Statistics released by the National Bureau of Statistics (NBS) in June revealed that India had overtaken the United States to become Nigeria's largest market for oil exports.
The moving of the US to the second position had been seen as a major development for Nigerian and Indian trade relations, given that the US had remained the country's largest export market since 1964.
The NBS data also revealed that during the quarter, India-Nigeria bilateral trade reached $5.15 billion in the first quarter or within 0.5 per cent of the US which, for the moment, retains the top-spot.
NBS put the total value of Nigeria's exports in the first quarter of 2012 at about $ 30 billion, showing that exports to India reached USD 4.2 billion, compared to $ 3.7 billion credited to the US in the period under review.
Nigeria's export to India is mostly crude oil and cashew nuts while India exports pharmaceutical goods, machinery, electronics and rice.
High Commissioner to Nigeria, Mahesh Sachdev had noted that the increasing business transactions were indicative of a trend of consistent robust growth.
"If this growth persists, India can be expected to emerge as Nigeria's largest trading partner in the next quarter. Interestingly, Nigeria was India's 14th largest trading partner last year." he added.