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Anxiety over memo banning 113 vessels from lifting oil

PHOTO: sweetcrudereports.com

PHOTO: sweetcrudereports.com

ONE of the rather more intriguing issues in the nation’s capital, Abuja, is the origin of the recent Presidential directive reflected in a memo by an official of the Nigerian National Petroleum Corporation (NNPC) banning 113 vessels from crude oil/gas loading activities in any of the 27 terminals in Nigeria “until further notice.”

The ban, however, is causing ripples in the international oil and gas industry.

In one of the signs that the business of governance has not taken off fully since the inauguration of President Muhammadu Buhari on May, 29, 2015, indications are that the ‘memo’, issued by Group General Manager in charge of Crude Oil Marketing Division of the NNPC, Mr Gbenga Komolafe, may have been released without the knowledge of the Permanent Secretary in the Ministry of Petroleum Resources and the Group Managing Director of the NNPC.

Neither Presidency officials nor those of the Ministry of Petroleum Resources were willing to speak on any issue related to the ‘memo’ as it was learnt that the Permanent Secretary may have been omitted from the communication line.

Presidency officials were also unwilling to clarify if the directive in question actually originated from the President’s Office.

In addition, worries were being expressed in Abuja that the process for the memo may have cast a cloud on the direction the present administration plans to take the nation’s oil and gas sector in the next four years, raising question about the signal the ban gives to international investors.

The category of vessels involved in the ban is VLCC (Very Large Crude Carrier) with capacity of 160,000 – 319,999 tonnes deadweight (DWT).

Sources expressed anxiety that while the memo on the ban contained the names of the vessels, their ETA (Estimated Time of Arrival) in Nigeria’s territorial waters, their International Maritime Organization numbers, the nine-digit Maritime Mobile Service Identity (MMSI) numbers that identified the vessels and the flag States of the vessels, it was silent on the motive for the ban.

This has elicited protests especially from international tanker owners who are worried that the blanket ban, without detailing the infractions that necessitated it, would adversely affect their businesses and is introducing new charter-party clauses.

In addition, some oil companies are now seeking assurances from vessel owners that their hired vessels were not on the list.
Both local and international stakeholders agree that the memo lacks transparency as it continued the secrecy in operations of Nigeria’s oil and gas sector.

While some stakeholders are wondering at reasons for the unexplained ban, posers that the step raises are: Why did the President’s directive not originate from the Group Managing Director of the NNPC? Was the memo a result of Presidential advice based on an earlier memo initiated by the NNPC or a Presidential fiat? Who owns the vessels and why was the directive silent on their ownership?

What quantity of crude oil did they take from Nigeria and at what terminal were they loaded? What countries or destinations were the crude discharged and the quantity? Specifically, were there any overloading or under-loading? Who are the oil traders or marketers that lifted the crude oil or chartered the vessels in question?

In the new spirit of change and transparency, why can’t everything be open for once? Are Nigerians not entitled to know what their leaders know?

These are indeed the questions that the Presidency must provide answers to in order to ensure it is committed to transparency in the sector.

The memo, which was addressed to all terminal operators, Chief of Naval Staff, Director of the Department of Petroleum Resources, Director General, Nigerian Maritime Administration & Safety Agency (NIMASA) and the Comptroller-General of the Nigeria Customs Service, stated categorically that the vessels were prohibited from engaging in crude oil and gas loading activities in any of the terminals in Nigerian territorial waters with immediate effect.

The Presidential memo read: “The NNPC has prohibited 113 tankers from engaging in crude oil/gas loading activities in any of the terminals within the Nigerian territorial waters until further notice. The affected vessels have also been barred from movements within the Nigerian territorial waters forthwith.
Finally, enforcement of the above directives takes immediate effect pending a notice to the contrary by Government, please.”

Since assumption of office, President Buhari, himself a former Minister of Petroleum as well as Board Chairman of the NNPC, has consistently railed against alleged fraud in NNPC and the Ministry of Petroleum Resources.

In far away United States of America, Buhari announced last week that “we are now looking for evidence of shipping some of our crude, their destinations and where and which accounts they were paid and in which country. When we get as much as we can get as soon as possible, we will approach those countries to frozen those accounts and go to court, prosecute those people and let the accounts be taken to Nigeria. The amount of money is mind- boggling, but we have started getting documents.

“We have started getting documents where some of the senior people in government, former ministers, some of them plotted as much as five accounts and were moving about one million barrel per day on their own. We have started getting those documents. I assure you that whichever documents we’re able to get and subsequently trace the sale of the crude or transfer of money from Ministries, Departments, Central Bank. We’ll ask the cooperation of those countries to return those monies to federation accounts. And we will use those documents to arrest those people and prosecute them. This, I promise Nigerians.”

An industry source told The Guardian: “The ban may not be unconnected with certain discrepancies between the volume of crude oil lifted by the affected vessels from various Nigerian terminals and the volume eventually discharged abroad to buyers.

The NNPC discovered huge discrepancies between the volume of crude oil lifted from Nigeria by these vessels and what they actually delivered to customers abroad and that they may have been part of the high level schemes used in stealing crude oil. You may note that of recent, the NNPC had faced the challenge of explaining the huge differences between the volume of crude oil lifted from Nigeria by these vessels and what they actually delivered to customers abroad.

And with the huge volumes involved, you may not rule out high-level connivance in crude oil theft by the affected vessels. And you know that crude oil theft has cost Nigeria huge revenue losses.

“The ban may also be part of the Federal Government’s drive to target vessels that have not paid the required dues or have been involved in incidents with the Navy it also be part of the implementation of the advice earlier issued by the Nigerian Maritime Administration and Safety Agency (NIMASA) to vessel operators and owners to comply with International Maritime Organization directives to countries to phase out vessels that do not meet international. No one knows for sure. This may be part of the pre-emptive measures by the NNPC to clean its acts before the anticipated strike by the President. And that is why the federal government needs to come clean on the motive for the ban and let Nigerians know what they know about it.”

The affected vessels include: MV Eliza, with IMO registration number 9387578, MV Happines (No. 9212905); MV Progress (No. 9180152), MV New Harmony (No. 963207); MV Cosgrace Lake (No. 9294587), MV Plata Glory (No. 9172674), MV Humanity (No. 9180281), MV Scf Shanghai (No. 9325968), MV Tenyo (No. 9222443), MV Astro Challenge (No. 9237072), MV Maran Thetis (No. 94214427), MV BW Bauhinia (No. 9315070), MV Dream (No.9356893), MV Xin Dan Yag (No. 96140048) and MV Desim (No. 9395305).

Indeed, there have been incidents between the NNPC and crude oil buyers over disparities in the volume of crude that was discharged and the volume on the bill of lading. This is especially true in transactions related to certain countries.

Even with the benefit of shortchanging Nigeria, industry experts insist that transparency must guide oil and gas business because the ban had immediate effect on the international shipping companies with Mr Bill Box, International Association of Independent Tanker Owners (Intertanko) Manager, Communications and External Relations telling Platts, a US-based information provider on energy and metals, that some of the ships had changed ownership since their last call in Nigeria.

Mr Box said that with the ban, “members say some oil majors are attempting to introduce charter-party clauses requiring the owner to warrant that the ship is not subject to any Nigerian bans or restrictions due to failure to report any out-turn figures for prior voyages.”

Intertanko, which is one of the largest grouping in the shipping industry with 207 full members and 285 associate members and a registered fleet of over 3,000 tankers of over 270 million DWT (deadweight), has therefore advised its members to avoid any such clauses in the charter-party agreements, stating that “on the contrary, charterers should be asked to warrant that they will ensure that out-turn figures are provided in Nigeria.”

Protesting the ban, Intertanko’s General Counsel Michele White, said in a letter sent to NNPC’s London office and copied to the Nigerian High Commissioner and the country’s Alternate Permanent Representative at the International Maritime Organisation (IMO) that “there is no reference to policies and requirements and no evidence or grounds are given for the ban. Many of these ships have not traded (in) Nigeria for a number of years and some have never been there.”

White stated that the ban should be lifted with immediate effect until grounds and evidence for the ban have been given to each vessel and its owner or operator, and the owner or operator has had an opportunity to respond.

To the Nigerian Ship Owners Association of Nigeria (NISA), the ban is good for local operators.
The Association said it was necessary because of alleged “sharp practices” recorded in the export of Nigeria’s crude by NNPC.

Speaking on behalf of the Association, its Secretary-General, Tunji Brown said the directive would give indigenous ship owners the opportunity to lift crude oil from Nigeria.

He added: “All the affected vessels are owned by foreign companies and the directive was a good one because it gives opportunity for our members to provide vessels for replacement.”
End.

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5 Comments
  • sunday government

    This is good news. What details do you require? It is clear from the report that these vessels were used to undermine the corporate entity called Nigeria by the commission of shady deals.

  • AA

    Someone should pls tell Mr President that Nigerians MUST know what is going on. The country is not a brigade that he has been assigned to command. We have rules, procedures, laws. The real meaning of integrity is transparent adherence to the rule of law, not just the wearing of austere danshiki. PMB is part of the history of a dysfunctional NNPC. He shd tell us what is going on now.

  • My advice to President Buhari on the way forward on the perennial challenges of Petroleum subsidy facing Nigeria:

    Considering the great expectation of Nigerians and the international community and the need for your administration to succeed. It is eminent for your government to commence with full force measures that will tackle the challenges of Petroleum Subsidy at the beginning of your administration; It is a known fact that the withdrawal of Petroleum subsidy is of great national benefit. But in view of the poverty in the land care must be exercise in the approach towards its total withdrawal removal to safeguard against throwing away the child with the basin.

    In my study of this perennial problem called “Petroleum Subsidy” I discovered the major causes of our failed Refineries and solutions we can proffer to this aged monster that has plagued our great country. Below are my findings and recommendations:

    The Petroleum Refining process is closely similar to LNG process. So if NLNG Bonny
    is a success story. Then Nigeria Refineries should also be successful. So why does our Refineries fail?

    Problem of Location: All our Refineries are located inland and crude supply network cut across several communities in accessible underground pipelines. As such they are prone to community interference in form of Pipeline vandalism which lead to frequent shutdown and expensive start up and host community interference/harassment of operators due to unemployment.

    While NLNG Bonny is located in an isolated Island free from interference. The average labour need of the Island communities are met by NLNG large employment.

    Secondly, Gas supply lines to NLNG Bonny are underwater pipelines these are not accessible
    to vandals.

    Problem of Ownership: Our Refineries are solely owned and operated by Government. As such they are run with national cake/ministry mindset. While NLNG Bonny is owned by Government and private sector (NNPC/JV partner). As such they are run with enterprise/profit mindset.

    Recommendations;

    Since most of the NNPC JV partners; Shell, Exxonmobil, Chevron, Total and Agip are among the leading global operators of Refineries in other countries. Federal Government should extend the NLNG Bonny JV scheme to the Refinery sector and establish two Mega Refineries in Bonny and Brass Island. These locations will be free from Harassment/interference due to their isolation from the inland and the supply lines to these locations will be underwater pipelines that are not accessible to vandal. Secondly, these location are close to Nigeria deep sea major crude production facilities. The proximity to the large crude source will reduce cost of constructing the supply lines to these Refineries. Finally, these locations are good for export of refined products. Saudi Arabia is now among the largest exporter of refine products. Why can’t Nigeria be an exporter of refine Petroleum products.

    Advantages:

    *It will diversify our economy in the face of the dwindling crude price.

    *It will provide for local consumption and commercial export of refined Petroleum Products.

    * It will solve the perennial problem of petroleum subsidy.

    *It will increase our foreign earning.

    *It will provide reasonable development for the region.

    *It will provide employment

    *It will provide for technological transfer to Nigerians.

    Mr. President, My greatest fear has always been “where will the Niger Delta Militants go? now that one of their own has left the seat of power with little or no development to the region.

    Secondly, where are the other sources of large employment in Niger Delta and Nigeria at large that can absolve Nigeria large unemployment youths?

    Finally what is the cost of establishing two mega refineries compared to Nigeria annual cost of importation of petroleum products” A food for thought Mr President.

    In my opinion if petroleum products are refined locally under a government private sector arrangement the issue of subsidy will be obsolete and the accruals can be channeled into other developmental projects.

    May GOD protect and direct your step as you take our great country to an enviable height.

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