Browsing articles tagged with " OPEC allocations"

NNPC Allocation Verifiaction

Feb 24, 2013   //   by Administrator   //   NEED TO KNOW INFO  //  Comments Off

What is a POP? What is in a POP? What do we verify?
included in a standard POP is:

  • Proof of product/Cargo Ref #
  • Export permit license #
  • Bulk approved MPR #
  • Quantity (per quarter)
  • Sometimes the stem number

I call the above a partial POP because these numbers are not coming as an allocation or ATS letter on NNPC letterhead – they are listed in the contract.

When you get the full letter you can often disqualify it right off just by looking closely for evidence of tampering but a partial POP requires a visit into the NNPC.

Off-OPEC POPs are only verifiable at the NNPC offices in Abuja after the vessel is loaded.
OPEC allocations are verifiable anywhere in the world via the Shell Screen.

Now here is the sad truth – our off-OPEC buyers are constantly asking for ATS, allocation letters and POP. The latter two of these POP and Allocation documentation are not verifiable anywhere in the world with any degree of consistency.

We have found the only pathway to verify a NNPC Approved Fiduciary’s ATS letter. That is at the offshore loading platform, the Bonny Terminal. AS OF MID JANUARY 2014 THE TERMINAL IS NO LONGER ALLOWING VISITORS, CITING TERRORIST THREATS

This is a secure facility and requires an appointment set by the seller. The NNPC staff at the terminal do not want to verify unless the buyer has a signed contract. This is a secure facility, guarded by the military and no one can just visit. You have to go with the seller’s rep, have a contract signed, a passport and an introduction letter from the buyer to get in the door and get the verification done.

There are three types of sellers that are selling off-OPEC Nigerian crude. Registered lifters, Allotment holders and NNPC Approved Fiduciaries. To get an allotment requires the seller to bring in the buyers POF, so almost all Allotment holders product is already sold. Allotment holders get an allocation award letter.

There is no trustworthy way to verify an allocation. (Nov 2012)
Not in London or Abuja.
I will give you several reasons why.
We took our allocation information in from six sellers to the offices (5th floor block B) towers in Abuja. Two of our sellers were already delivering oil to buyers. One of those was direct from the NNPC account issued out of the port Harcourt NNPC offices thru the terminal managed by Shell Oil.
They told us that none of the documents verified BUT that they would be happy to introduce us to a real seller that they know of.

You can not even verify allocations at the main office because money talks louder than honesty.

Now there are some things you need to know about off-OPEC allocations (resellers= Allotment Holders) They are issued direct by the NNPC only. They list the amount of oil and the source from which that oil is lifted from and they also list the size of the source. Allotment holders have a fixed amount of oil allotted usually for a year on a quarterly allotment. The largest allotment I have seen was for 16 million barrels per quarter. Once their allotment is sold they can not extend or increase their allotment without permission. We have had an allotment holder and registered lifter come to us to get more BLCO because the NNPC would not extend their allotment.

Official documents are printed on the NNPC letterhead (it has an NNPC watermark under the typing) and they are time sensitive and cost money. So a seller (allottee) might pay for one after getting the first contract. If he closes that sale then the amount available is no longer the amount listed because some of that allotment has then been sold. This means that the seller may no longer have the right to sell because he has sold all of his allotment and even though the document may say he has 16M bbls per quarter it may be sold already.
A seller is not going to go into the NNPC and pay for an allotment letter every time a potential buyer shows up. So he will give out the old letter. Even so, it is not verifiable as I mentioned before.

NNPC Approved Fiduciaries do not get an allotment, they get an authority to sell document (ATS Letter) and are selling out of the bulk equity account, so they can sell 10 Million barrels per month if they can get fit into the lifting schedule. What they need is the buyers POF and they can get it done.

We are mandates for three Fiduciaries selling out of the giant source at + 488 million barrels direct from the NNPC bulk equity account at the moment.

All buyers should expect to be able to verify the Fiduciaries ATS letter to ensure the seller had the legal right to sell. We have done this a few times and when a buyer comes to the Bonny Terminal he quickly finds out that the seller is real and that there are people at the terminal that know the seller which helps the Buyer to be able to trust the purchase contract since they check that also.
THIS IS NO LONGER POSSIBLE There is a new procedure our sellers are using to sell oil and totally verify the product. Please see the registration link below.

Now, once a contract is signed and a banking instrument is in place there are lifting schedule (programing) documents and other documents that are created that are easily verified just as though the sale was an OPEC sale.

Now you come to us, and we are fortunate, by the grace of God, to have three sellers that will not run out of oil , even though it is the end of the year and most allottees have sold their share. (written in November)

If you have a buyer now that wants to buy BLCO you would do well to go to this this page and register.

Author: Jeff Scott Google