The Minister of State for Petroleum, Dr. Ibe Kachikwu had some weeks sealed a $15 billion crude-for-cash swap deal with India. Although the deal has been frowned upon in different quarters, the fact remains that Nigeria in its current condition needs to firm up its trade ties with countries like India and Kachikwu’s success in pulling off the deal has done just that.
For Nigeria, the cash being paid upfront in the deal is a definite advantage for a cash strapped who is finding it difficult to carry out necessary developmental projects needed to lift it out of its economic recession.
In addition, India represents one of the world’s fastest growing economy, making energy demands to continually rise. Long-term deals with such a country could translate into greater trade volume in the coming years. Already, Indian oil companies are signaling their intention to boost quantity of crude oil bought from Nigeria from 63 million barrels to 77 million barrels. ‘We still buy Nigerian crude, as our refineries need it. We will continue to buy Nigerian crude, but we want them to supply us with more’ an Indian refiner said.
For India, the benefits are obvious. Crude oil prices are at one of the lowest recorded in recent times. As such, tying down long-term crude oil contracts is just the wise thing to do. In addition, considering that some of their refineries were built to refine Nigerian grades, doing business now with Nigeria is essential.
According to a source from an Indian refiner, “Nigerian crude is a must have for most of our refineries, especially the older ones, which have been designed to run light sweet crude. A win-win for everybody.