Daily Energy Report
US Shale & Nigeria, OPEC output rises, Green hydrogen startup, EU war on CO2, Critical minerals emergency, Oil investment needed, US oil group berates Biden, EU energy reforms, and more.
Chart of the Day: If US Shale production declines, how will that affect imports from Nigeria?
Figure (1) above plots US tight oil production vs. imports from Nigeria. Nigeria was the primary loser from the shale revolution. Its market share in the US shrank by 93%. Why did this happen? US light crude produced from shale plays replaced the light sweet crude imported from Nigeria.
EOA’s Main Takeaway
Yesterday was Nigeria’s National Day. On this occasion, we published a report entitled: Nigeria at 63: From Independence from Britain to Dependence on Oil and Gas. While the report covered many issues, the relationship between the US shale revolution and oil imports from Nigeria warranted a deeper look. Many investors, traders, and analysts believed that US tight oil production would peak this year and that it would be on the decline thereafter. If this is the case, then Nigeria stands the benefit the most: US crude exports will decline, and Nigeria will face less competition in the international market. Meanwhile, US imports of light sweet crude will increase, and Nigeria can recover some of its lost market share. Bottom line: If shale peaks, shale companies will suffer, but US refiners will do well anyway—thanks to Nigeria.
Story of the Day
In September, OPEC's oil output increased for the second consecutive month. The surge was primarily driven by Nigeria and Iran. Nigeria, grappling with oil theft and regional instability, saw an uptick of 110,000 bpd in exports. Iran's output reached its highest since 2018 at 3.15 million bpd, possibly due to its ability to circumvent U.S. sanctions and the U.S.'s relaxed enforcement as both countries aim to improve relations.