Oil traders and shipping brokers said a newly implemented “letter of comfort” requirement under which vessel owners must sign a guarantee that their ships would not be used for theft had made it more difficult and expensive to load Nigerian crude, putting some buyers off.
So these guys actually want Nigeria to allow them to use their vessels to steal our crude?
A copy of the letter draft seen by Reutersrequested vessel owners to “guarantee to indemnify” the government and the Nigerian National Petroleum Corporation against any illicit use of their vessels, which led some owners to reject pending bookings. Traders say others are refusing future requests for now.
“Nobody is coming forward for offering the vessel and whoever is willing to go to Nigeria is asking exorbitant rates,” said K. Namdeo, head of refineries at India’s HPCL, adding they would “be cautious in future” about buying Nigerian crude.
Tanker owner, Heidmar, was said to have rejected an HPCL Nigerian fixture due to insurance concerns over the letter. Finding a replacement proved difficult. Provisional fixtures showed the MT Solana sailing to West Africa for HPCL, but the vessel turned away from Africa, according to tracking data, and is now en-route to the Bahamas without oil.
Fixtures showed the refiner putting two Suezmax vessels on subjects for the journey, which typically adds to costs.
Some European buyers are also now treading carefully with Nigeria, according to the report.
An oil trader for one Mediterranean refiner said they “will not touch a single drop of Nigerian crude until this matter on the letter of comfort is solved.”
There is little disagreement that Nigeria needs to fight oil theft, which President Muhammadu Buhari has said siphons as much as 250,000 barrels per day of crude of its nearly two million bpd of production.
Industry sources said an initial effort, the banning of roughly 100 oil tankers that came from Buhari’s office in July, was too blunt an instrument. But in lifting that ban earlier this month, it added the letter of comfort with immediate effect, which sources said applied to all vessels, creating a potentially bigger problem.
Oil tanker industry association, INTERTANKO, said the letter as drafted would give the Nigerian authorities a “blank cheque” for any perceived violations.
“NNPC’s guarantee terms would allow the Nigerian authorities to impose an arbitrary penalty for breach of local law – of which owners might be unaware – and then demand an indemnity for their losses without the need to prove any loss,” said INTERTANKO’s General Counsel, Michele White, adding that “owners’ insurance would not respond to that.”
I think NNPC should not give in to this cheap blackmail, transparency is the watchword for change.
