BONNY LIGHT CRUDE OILBONNY LIGHT CRUDE OIL (BLCO) NIGEIAR.
BLCO : NNPC Approved Procedure | GLOBAL OIL AND GAS
BONNY LIGHT CRUDE OIL (BLCO) NIGERIA
CLAUSE 1 – SCOPE OF THE CONTRACT
The Seller and the Buyer, with full corporate authority and legal
responsibility, and under penalty of perjury, respectively represent
and warrant that one party is the lawful owner of the Commodity in
quantity and quality as herein specified, and the other party has the
full capability to purchase, receive and pay for the sold and
delivered Commodity
1.1 COMMODITY/PRODUCT: The Commodity/Product offered for Sale by the
Seller in this Contract shall be “Export Grade Bonny Light Crude Oil”.
The Product shall meet Bonny Light Crude Oil Blend Product
Specification as quoted in the International Market. Please see
APPENDIX A for Bonny Light Crude Oil Product Specification details.
1.2 QUANTITY: The Seller has agreed to offer for Sale to the Buyer,
Two [2] Million Barrels of Export Grade of Bonny Light Crude Oil on a
Monthly period over a period of twelve [12] consecutive months which
is one year.
1.3 MODE OF DELIVERY: It is agreed that the Export Grade Bonny Light
Crude Oil offered for sale in this Agreement will be supplied and
delivered by the Seller to the Buyer on a CIF
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basis.
1.4 LOADING PORT: The Loading Port for the Product shall be Bonny
Terminal or any other Terminal within the Federal Republic of Nigeria
that has the capacity to dispense Export Grade Bonny Light Crude Oil.
1.5 DELIVERY PORT: The “Port of Delivery” or “Discharge Port” for the
Product in this Contract shall be XXXXXX XXXXXX for the whole entire
period of this Agreement which validity is one year
However, if the Buyer chooses to change his/her Delivery Port after
one or more deliveries to a different Delivery Port, a two [2] months
advance notice is required by the Seller to effect the change. It is
agreed that the Seller will adhere strictly to the Price quoted in
this agreement if and only if the Delivery Port is within Western
Europe. The Seller has a right to ask for additional fee to cover cost
of freight if deliver port is moved outside Western Europe.
1.6 FIRST DELIVERY: It is agreed that the first delivery shall be on
or before of XXXXXX 30, 2018. The first delivery shall take place
within 30 days of signing this contract.
1.7 TRANSACTION CODE: XXXXXXXXXX
1.8 ORIGIN OF PRODUCT: The Origin of the Product shall be the Federal
Republic of Nigeria.
1.9 VALIDITY OF THE CONTRACT: This Agreement is valid for twelve [12]
consecutive months beginning from XXXXXX 2018 when the first delivery
is expected, with possibility of extensions and roll-over.
The commodity shall be available within the period from XXXXXXX 2018
until completion of the contract, if possible equal monthly lots of
about 2,000,000 barrels +/-5% (Five percent) more or less at Seller’s
option during the whole term of the contract. Please see Appendix B.
CLAUSE 2 - PRICE
2.1 The price shall be determined by the average of the three days
around the Bill of Lading Date (one day before, BL date and one day
after). The main quotations as rep
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There are procedures and checklists that must be followed to ensure
that a genuine transaction takes place. Some of them are:
Professional Social Media Marketing & Management
1). Proof of Product and Proof of Funds:
Before any transaction can occur between a genuine crude oil buyer and
a genuine crude oil seller, both parties must show they are reliable
from both ends. The crude oil buyer must show they have the proof of
funds to purchase the volume of crude oil been sourced, and the crude
oil seller or crude oil broker must prove ability to deliver crude oil
to the crude oil buyer.
If the crude oil seller or crude oil broker cannot show an ability to
supply through either a safe financial procedure or some other means
to the crude oil buyer, the buyer can choose to walk away to another
crude oil seller or broker immediately.
2). The Type Of Crude Oil Produced In Nigeria:
Nigeria produces different varieties of crude oil, with the most
widely demanded being the Bonny Light Crude Oil (BLCO). This crude oil
is the best in the world because of its relatively low cost to refine
due to its low sulphur content. This is a major reason most crude oil
buyers (refineries) around the world are interested in Nigeria’s crude
oil.
Forcados is another type of crude oil in Nigeria that is considered a
heavier grade. Lighter grade crude oil is preferred due to its easy
refining state, making it easy to produce diesel from it and many
other petrochemicals.
The different grades of the crude oils in Nigeria generally have
slightly different prices.
Four Things To Know About Buying And Selling Crude Oil In Nigeria
1). Availability of Funds:
To buy or sell crude oil from Nigeria, you’d need to have a lot of
money, usually multi-millions of dollars. This is a reason several
people find it difficult to venture into the crude oil brokerage
business since they can’t find a crude oil seller or crude oil buyer
that has the financial capacity to act.
Usually, when a crude oil buyer indicates interest, they’d have to
show the seller that they have proof of funds.
If a transaction is to pull through eventually, the crude oil seller
with an ability to supply would have to pay 100% for the crude oil
cargo before the NNPC can sell to them on FOB basis, afterwhich they
go on to resell the crude oil on CIF basis. But since most crude oil
sellers don’t have this some crude oil brokers have the ability to
raise the money, and so, source the crude oil on behalf of the crude
oil seller with the ability to lift crude oil, receive the ICPO in
their business name, and leverage the crude oil seller’s connections
from the NNPC to purchase and ship the crude oil, while settling the
original crude seller with the a commission.
In the event that the crude oil seller can afford to have the money
for the transaction, the crude oil broker can negotiate a commission
per barrel sold on every barrel that is successfully sold. It could be
50 cents per barrel, lesser, or more.
2). You’d Need A Crude Oil Seller:
As stated in the previous point, a crude oil buyer will have to find a
genuine crude oil seller or crude oil broker in Nigeria to be able to
transact successfully. To verify their authenticity, you’d need to
ensure the crude oil seller or crude oil broker can use a very
reasonable procedure, show proof of past performance, show ability to
post a performance bond, while the crude oil buyer will provide a
proof of funds.
3). You’d Need A Crude Oil Buyer:
Just as a crude oil buyer needs a crude oil seller, a crude oil seller
also needs a crude oil buyer. The good thing is crude oil buyers are
constantly looking out for genuine crude oil sellers, and when they do
find one, they prefer to have a long-term contract that spans through
several years.
You could also source crude oil buyers yourself by reaching out to
them through their company contact details.
The Different Ways To Get Crude Oil From Nigeria
1). Directly From The Nigerian National Petroleum Corporation (NNPC):
The Nigerian National Petroleum Corporation (NNPC) is Nigeria’s oil &
gas regulatory body, and is the organization that has the direct right
to sell crude oil. The problem with going through the NNPC is they
have very strict conditions, and so, most crude oil buyers prefer to
go through companies who have been awarded crude oil allocations by
the NNPC.
Some of the conditions to secure an OPEC allocation are:
A proof of fund spanning through $100,000,000.
Will post an upfront SBLC before you even secure an allocation.
Must own a local refinery or international refinery.
And much more.
These conditions make refineries take the other route of using crude
oil sellers.
2). OPEC Sellers:
These are oil and gas companies in Nigeria that have the ability to
lift crude oil from the NNPC because of the allocation allotted to
them. They are required to sell off their allocations within a certain
period and can be approached by crude oil buyers if they cannot meet
the conditions set by the NNPC to buy directly from the corporation.
3). Independent OFF-OPEC Sellers:
These are individuals or smaller businesses who have connections to
the federal government to lift crude oil on Provisional Lifting Rights
basis. They could make their purchase direct from the NNPC or the
Production Sharing Contract holder.
4). A Loaded Vessel:
A crude oil buyer can buy from a crude oil seller who already has a
vessel loaded with crude oil. This usually happens when the crude oil
seller’s previous crude oil buyer defaults, leaving them with crude
oil already paid for. But 99.5% of loaded crude oil offers are scams.
The Different Ways To Sell Crude Oil From Nigeria
There are four different ways to sell crude oil from Nigeria. They include:
1). Cost Insurance and Freight (CIF):
Here, the crude oil seller will handle everything from loading the
vessel and sending the crude oil to wherever the buyer wants it
delivered. They buy from the NNPC on FOB terms and ship to the crude
oil buyer on CIF terms.
2). Freight On Board (FOB):
Here, the crude oil seller pays for the loading and clearance costs of
the cargo, while the crude oil buyer pays the cost of marine freight
transport, insurance, unloading, and transportation from the arrival
port to the final destination. In this case, the crude oil buyer pays
for the cargo before it sails out of Nigerian waters.
3). Tanker Take Over (TTO):
Here, the crude oil buyer will take over the vessel, offload at their
destination, and return it.
4). Tanker To Tanker (TTT):
Here, the crude oil buyer uses their own vessel, then the oil is
transshipped when the transaction is fully settled.
How Payment Is Made for Crude Oil Transactions In Nigeria
Payments are made through various means like wire transfers, bank to
bank transfer, or any other agreed means of payment.
The Price Of Crude Oil In Nigeria
The price of crude oil in Nigeria per barrel is usually what is listed
on the OPEC’s website.
How To Find Genuine Crude Oil Sellers In Nigeria
1). Genuine OPEC crude oil sellers in Nigeria are given allocations
from the NNPC, which is the body that regulates the Nigerian petroleum
industry. The first step to verify the authenticity of a crude oil
seller then, is to ask to get their allocation details for
verification. A failure to produce this can mean the crude oil seller
is not a real OPEC seller. Besides, all OPEC crude oil sellers in
Nigeria have their names published on the news yearly.
OFF-OPEC crude oil sellers on the other hand are not registered but
have the ability to lift crude on PLR basis. After the crude oil buyer
has placed a financial instrument, any genuine OFF-OPEC seller would
get a verifiable Laycan that shows they have a lifting schedule in
place. Some of these crude oil sellers would be willing to post an
upfront performance bond to give the crude oil buyer comfort.
2). Be wary of crude oil sellers asking for upfront payments. Many, if
not all of them, are fraudulent and will make you lose your money
faster than you’d realize.
3). Ensure you speak with the crude oil seller over the phone to ask a
series of questions. Replying emails is not enough. If possible, it is
best for the crude oil buyers to get to eventually meet the crude oil
seller in person. This is a whole lot safer than just remote
conversations.
4). Upon clearing the cargo, the seller should be able to provide the
full verifiable cargo documents. If the documents sent are not
verifiable, then you know there’s a problem already.
How To Find Crude Oil Sellers Through Intermediary Facilitators Or
Brokers In Nigeria
To enable a crude oil transaction to go through easier and safely, a
crude oil buyer may need to work with a facilitator. This is an
individual that understands how to facilitate a deal and go through
the sales process at the NNPC.
Getting genuine crude oil sellers directly can be extremely difficult
for a crude oil buyer, but going through a facilitator or crude oil
broker can help you execute a transaction faster and easier.
Some Terms Used In The Crude Oil Business In Nigeria
1). Proof of Product (POP):
This is a document presented by a seller to show proof that they have
the product for sale. It can be sent via email or done physically and
will go a long way in helping a crude oil buyer vet the authenticity
of an available crude oil cargo.
Asides this, if the crude oil seller claims to be an OPEC seller, you
have to ensure the crude oil seller has a genuine letter of allocation
from the NNPC. A crude oil seller who presents their’s will then
enable you to easily verify their authenticity or not from the NNPC’s
crude oil marketing department.
If they’re OFF-OPEC sellers, then you’d need to ensure the trade
process is extremely secure for all the parties involved.
2). Proof Of Fund (POF):
This document shows the crude oil seller that the crude oil buyer
truly has the funds to acquire the crude oil required. This financial
document will be issued by the crude oil buyer’s bank to prove the
buyer isn’t a time waster or a fraud.
Some POF’s you can obtain that are acceptable are:
Bank Comfort Letter / RWA Letter
Bank Pre-Advice Confirming Readiness To Place A Financial Instrument
Bank Guarantee (BG)
Letter of Credit (L/C, or, LOC)
MT 799
MT 103
3). Sales And Purchase Agreement (SPA):
This a document that binds the crude oil buyer and crude oil seller to
a contract, and stipulates stiff penalties for any party that attempts
to scam or waste anyone’s time. Before an SPA is signed, both parties
have to carefully come to an agreement, else one could be defrauded by
the other even within a legal context of a contract, forcing one party
to pay huge sums of money running into hundreds of thousands of
dollars without a transaction taking place.
4). Letter Of Intent (LOI):
This a legal document that is issued by the crude oil buyer to show
their intent, specification, and conditions to transact a crude oil
deal.
5). Facilitator (Crude Oil Broker):
A facilitator is a middle man or broker who goes in search of both
genuine crude oil buyers and crude oil sellers. By standing in as a
link between two credible sources, the facilitator will ensure every
document goes through them to the other party.
If the facilitator or crude oil broker successfully seals the contract
and earns around 50 cents per barrel for say 2 million barrels, they
could earn up to $1 million Dollars, depending on how many
facilitators are in the transaction chain.
6). Mandate:
A mandate is the representative of either the crude oil seller or the
crude oil buyer. They have the authority to act on behalf of the
seller or buyer and may earn up to $1 per barrel in the transaction.
Some Problems That Arise In The Crude Oil Business In Nigeria
1). The Integrity Of Crude Oil Buyers And Crude Oil Sellers:
This is the biggest problem because it is always difficult for genuine
crude oil sellers to meet genuine crude oil buyers and vice versa.
When this is a problem, it is best to go with a reputable facilitator
or crude oil broker’s advice.
2). Cutting Corners Around Due Process:
Some problems could arise if the crude oil buyer demands to see a
Proof of Product, and allocation documents first, but the crude oil
seller instead wants the buyer to show the Proof of Funds and to also
sign a Sales and Purchase Agreement (SPA) first.
Many scenarios could cause this situation to happen, ultimately, any
buyer should take extra caution when a seller insists on signing an
SPA first.
It’s important to know that allocation documents are only valid for
OPEC transactions. For OFF-OPEC transactions, the crude oil buyer has
to ensure the trade process is extremely secure for all the parties
involved.
3). No Bribery:
There is no need for any form of bribery to occur, as every contract
term for every party is always well documented in the contract, and
everyone gets paid their legitimate fee after the transaction is
completed.
4). Problems With Finding Real Facilitators (Crude Oil Brokers):
Finding crude oil sellers is hard, and so, going with reputable crude
oil brokers or facilitators makes the process a whole lot easier. But
getting genuine facilitators is a large problem even for most crude
oil buyers.
The large pool of fraudulent crude oil facilitators in Nigeria makes
many crude oil buyers extremely wary, and so, makes even genuine crude
oil brokers look bad or have a heavy suspicion placed on them by most
crude oil buyers.
As a genuine crude oil facilitator, you’d have to do a great job of
convincing the crude oil buyers you’re for real, and their hard earned
money would not go to waste.
5). Several Facilitators In A Transaction:
When there are several crude oil facilitators involved in a
transaction, the commission level continues to reduce per facilitator,
and information passes through very slowly. Also, when crude oil
buyers realize there are too many people in a transaction, they tend
to pull away from it and go in search of another with a more direct
link.
Too many people in a transaction make it difficult to pull through.
But then again, you could choose to stand in as a facilitator for a
crude oil seller or a crude oil buyer. If you realize a crude oil
buyer has a mandate, you can offer to stand in as a facilitator for
them, and still stand in as a facilitator for the crude oil seller,
enabling you to maximize your revenues.
6). Poor Knowledge Of The Product:
THANKS,
MR.SUNDAY MORRISON.
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Reply-To: sunitexcu@gmail.com
From: "MR.SUNDAY MORRISON" <crudeoilgs84@gmail.com>
Date: Fri, 3 Jan 2020 03:15:50 -0800
Subject: BLCO : NNPC Approved Procedure | GLOBAL OIL AND GAS BONNY LIGHT CRUDE OILBONNY LIGHT CRUDE OIL (BLCO) NIGEIAR.
To: undisclosed-recipients:;
Bcc: [REDACTED]