NEW YORK (Dow Jones)--When it comes to supplying the U.S with oil, Africa is quietly trumping the Middle East.
U.S. crude oil imports from Africa topped supplies from the Middle East in 2006 for the first time in 21 years, government data show. As recently as 2001, U.S. imports from the Middle East topped African supplies by more than 10%, or 1.3 million barrels a day. Now, the fractional edge given to African crude oil suppliers in the world's largest consumer of oil underscores a number of market changes and may grow wider in coming years.
Surging growth from Asia - led by China, where oil demand is expected to grow 6.2% this year - is drawing huge volumes of Middle East crude. In the U.S. market, output constraints from creaking, aging oil fields in Mexico and Venezuela, weigh against a rise in heavy crude from Canadian oil sands.
In 2006, U.S. crude imports dipped 0.3% from a year ago, according to preliminary data from the Energy Information Administration. At 10.095 million
barrels a day, the figure is just 31,000 barrels a day below the record 10.126 million barrels a day of crude imports recorded in 2005, when hurricanes disrupted GulfCoast output.
Crude supplies from Africa and the Middle East each accounted for a 22% share of U.S. crude imports, but in actual physical supplies, Africa's flow topped the Middle East by a trickle of 8,000 barrels a day. Crude from Africa, at 2.23 million barrels a day, was the highest since 1979 and a 4.8% jump from 2005. The 22% share - the biggest in 25 years - compares with 21% last year and a share of less 13% in 2002.
The volume of U.S. crude imports from the Middle East, at 2.22 million barrels a day, dipped just 20,000 barrels a day on the year, but marks the third straight annual decline. The flow of Middle East crude into the U.S. was the lowest level since 1998 and the 22% share is the slimmest since 1997.
Markets Redraw Supply Maps
The Bush administration is the most recent proponent of a long-held U.S. policy that has called for more emphasis on regional oil suppliers, outside of the Middle East, the volatile region that produces the most oil and holds the bulk of reserves. But market factors, more than government action, have played a major role in the trend.
In response to rapid growth in Asian markets, major producers such as Saudi Arabia, the world's largest oil exporter, and other Middle East producers have targeted more volumes to China and India, where in many cases they've also built joint ventures to sell petroleum products.
At the same time, rising output in Africa, aided in part by U.S. companies who are denied similar investment opportunities by in the Middle East oil patch, has found a natural home in the U.S. High flows of short-haul African light, sweet crude oil are replacing declining supplies from North Sea producers Norway and the U.K.
"Strong demand growth in Asia is pulling Persian Gulf crude eastward and the new supply from Africa is staying in the AtlanticBasin," said Greg Priddy, global energy analyst at the Eurasia Group in Washington, D.C.
Canada, which has been the top U.S. crude supplier in each year since 2004, when it eclipsed Saudi Arabia, supplied 1.782 million barrels a day to the U.S. in 2006, the most ever from a single source and a 9.1% jump from a year ago.
Supplies from other traditional top suppliers Mexico and Venezuela are raising concern, due to declines in output. Crude imports from second-ranked Mexico fell 27% in December from a year ago, to the lowest level since June 2001. Mexico's crude output was the weakest since November 2000, as production from the aging Cantarell field fell 25% on the year.
In a year that saw relations between the U.S. and Venezuela plummet after President Hugo Chavez called U.S. President George W. Bush "the devil," U.S.
crude imports from output-constrained Caracas slumped 8.2%. While Venezuela held its fourth-place ranking among U.S. crude suppliers, the volume of 1.139 million barrels a day was the lowest in any year since 1994.
Saudi Arabia, the world's largest oil exporter, saw its third straight decline in crude supply to the U.S. market, with a 1.7% dip to 1.42 million barrels a day, the lowest volume since 1999.
Angola Embodies Evolving Market
Crude imports from Kuwait fell 21% to 179,000 barrels a day, the lowest level since 1992 when the emirate was recovering from damage cause by the Iraqi invasion. Kuwait slid one place to rank as the 10th top crude source for the U.S. in 2006.
But it is Angola that embodies the evolving market. U.S. crude imports from Angola surged 41% in December from a year earlier, capping a 12.5% full-year gain to a record average of 513,000 barrels a day.
While it pumped up volumes into the U.S., solidifying its seventh-place ranking, Angola also shipped nearly as much crude to China. Angola's 34% jump in crude sales to China ranked it as the top supplier from January through November, but for the full year, its volume fell just 2% below Saudi Arabia's, to rank as the econd-biggest crude supplier to the world's second-biggest oil consumer.
Angola, which plans to grow its crude output by about 500,000 barrels a day to 2 million barrels a day by year-end, will be a wild card, as its status as the 12th and newest member of the Organization of Petroleum Exporting Countries becomes clear.
Angola isn't Africa's only big story. U.S. crude imports from Algeria jumped 57% to 357,000 barrels a day in 2006, the highest volume since 1980. For the second straight year, crude imports from Chad rose by nearly 30%, reaching a highest-ever 95,000 barrels a day in 2006.
U.S. imports from Nigeria, Africa's biggest oil producer, dropped 3.2% on the year to 1.043 million barrels a day, the lowest level since 2003 as civil unrest in the oil-producing Delta region disrupted supplies throughout the year and could be a factor again.
That may give a notion that the U.S. is shifting from reliance on crude from the Middle East - where worries over Iran, Iraq and al-Qaeda are a market constant - to a region were supply disruptions are a constant. But Priddy noted that growing output from Nigeria and Angola and elsewhere in the Gulf of Guinea egion will be offshore, making it harder to target by rebels and easier to patrol by U.S. naval forces, which are increasing their presence in the region.
After Africa has its day in the sun, though, the U.S. and the rest of the world still will be reliant on the Middle East suppliers, who hold 60% of the world's proven oil reserves - more than seven times greater than those in Africa.
Source: David Bird, Dow Jones Newswires; 201-938-4423; david.bird@dowjones.com