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LequteMan
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New measures introduced by the Nigerian government to monitor crude transit and check oil theft are reportedly threatening income lifeline, compounding the damage the crude price fall has done to Nigeria’s finances, access to dollars and imports.
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.
According to Reuters, the letter requested 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.
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.”
Shipping sources said that in addition to Heidmar, Asian companies, China Shipping and AMCL, would not call at Nigerian ports for the time being, nor will Greece’s Chandris.
“The revenue impact will be significant,” said Dolapo Oni, head of energy research with pan-African lender, Ecobank.
“Due to the expensive freight, we are likely to see differentials weaken considerably, which means we could have lower revenue than normal,” he added.
Reuters
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.
According to Reuters, the letter requested 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.
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.”
Shipping sources said that in addition to Heidmar, Asian companies, China Shipping and AMCL, would not call at Nigerian ports for the time being, nor will Greece’s Chandris.
“The revenue impact will be significant,” said Dolapo Oni, head of energy research with pan-African lender, Ecobank.
“Due to the expensive freight, we are likely to see differentials weaken considerably, which means we could have lower revenue than normal,” he added.
Reuters
