* Third of Nigeria, Algerian exports in limbo as shale booms
* Price war between oil exporters seen heating up
* Asian refiners prefer heavier, diesel rich grades
By Julia Payne and Emma Farge
LONDON/GENEVA, Feb 26 (Reuters) - African crude exports to the United States could slip to a trickle this year as the world's top oil consumer enjoys a shale oil boom, allowing China, often now the buyer of last resort, to become ever more choosy.
The dire prospects for West African and Algerian exports to the U.S. is also stoking competition among producers, which must sell to a reduced pool of Asian and European clients.
And the growing glut of sweet oil in the Atlantic Basin has already started creating price havoc from last year and this will likely heat up in 2013.
Angola has lost the U.S as its top buyer, which last year accounted for just 11 percent of exports, behind China and India.
"There will be a greater competition to make up for a fall in sales to its (Angola's) once largest market and ... oil prices may fall as a consequence," Sandra Julio, President and CEO of Angolan state oil firm Sonangol's trading branch, said in a company document.
Analysts estimate that some 900,000 bpd of Nigerian and Algerian crude oil, accounting for more than 1 percent of global supply, is soon to be displaced in the U.S. market by shale oil.
Top U.S. refiners Valero and Phillips 66 said they have stopped importing light, sweet oil to the U.S. Gulf coast as new shale oil production combined with better pipeline flows has yielded cheaper domestic alternatives.
"The Seaway ramp-up and the other pipeline start-ups make it possible that WAF (West African) flows to the U.S. will fall to zero by end-2013," Citi analysts said, referring to the pipeline linking the U.S. mid-continent to Gulf Coast refiners.
For a graphic of U.S. imports by country see: http://fingfx.thomsonreuters.com/2012/05/23/0950235849.htm
Nigeria currently exports about 700,000 bpd, or one third, of its crude to the United States out of a total of 2 million-2.2 million bpd. At its peak, Nigeria used to export around 1.6 million to the U.S.
Nigeria's standard crude Qua Iboe traditionally sells at a premium of $1-$3 per barrel to benchmark Brent and Algeria's Saharan Blend at between flat to a premium of $2 per barrel.
Both grades have traded regularly below traditional levels in the past 12 months. A 10-cent drop in prices for Nigeria's oil means a yearly loss of around $70 million.
Nigeria has already sold cargoes for around 40 cents less than the official selling price this year, according to estimates by the pan-African Ecobank.
Nearly half of Algeria's exports of around 650,000 bpd used to go to the Americas, mostly to the U.S. Gulf coast but now the total trans-Atlantic volume fluctuates at around a third of exports and are nearly all absorbed into Quebec, Canada.
That means close to 200,000 bpd of Algeria's light sweet Saharan Blend crude oil exports will also be seeking new customers soon.
Valero is set to buy more U.S. light sweet crude for its 265,000 bpd Canadian refinery in Saint-Romuald, Quebec starting at the end of the year.
TOO LIGHT FOR ASIA
Producers of the light, sweet crudes have been able to divert some cargoes eastwards and West African exports to Asia rose to a record high last year.
But a flattening in Chinese demand and a preference for diesel-rich heavier grades at new refineries will cap demand.
"Asian refiners do not like light grades. They like sweet medium grades," a Chinese trader said, adding Libyan crude and some relatively cheap Australian light grades suit Asia better.
Refinery closures in Europe have increased competition among African producers for Asian clients and Libya - once mostly an exporter to Europe - now counts China as its number 2 buyer, after Italy, with 13 percent of purchases.
Recent import tenders show that Asian buyers like Indian Oil Corp and Indonesia's Petral flit between purchases from Algeria, Libya and Nigeria, depending on who can offer the best price.
Exports of Algerian crude to Asia spiked in late spring of 2012 but mainly because Saharan Blend dropped to over a $3 discount to dated Brent, a record low.
Algerian crude already competes with West African crudes in Northwest Europe to replace depleting North Sea production, but the competition will intensify as even Canadian grades will need to find new buyers.
The shale boom in the U.S. has also started displacing Canada's own exports from Newfoundland. More than 2 million barrels of Canadian crude reached Northwest Europe between December and January and some will go as far as Chile in March.
The process of revising prices to be more competitive is likely to be painful for countries like Nigeria which are used to charging a big premium for their gasoline-rich oil, ideally matched for U.S. refiners and once considered top quality oil.
"At these prices Asia is not going to take more than they are currently taking," said a trader with a Chinese refiner.
Prices for West African crude, set at a differential to global crude benchmark dated Brent, are at risk of falling steeply in order to lure more buyers, Citi said.
"U.S. shale oil and an increase in their gas production is already affecting our exports to the United States. Bear in mind that the United States is one of our major importers in this sector," Nigerian Oil Minister Diezani Alison-Madueke was quoted as saying at a conference in Abuja last week.
For a related story, see: (Additional reporting by Dasha Afanasieva; editing by James Jukwey)