Buying Nigerian Crude Oil
Here is a letter I wrote to an agent that said his buyers were having a problem getting real sellers and buying Nigerian crude oil.
Sorry to hear about your difficulties in seeking the best feed stock in the world.
Much of the problem lies in the fact that Nigeria has reached their OPEC quota and can not sell new contracts for crude oil without exceeding its OPEC quota.
Regardless, Nigeria has been doing so for many years.
It is a very private marketplace. A case in point: For many years SGS had a contract to do all of the terminal inspections for the NNPC. But they were caught reporting their inspection data to OPEC and were immediately fired.
Intertek is now doing all of the terminal inspections with a pledge to keep Nigeria’s business private.
Nigeria sells about ( X% : redacted for privacy purposes) of its production off-OPEC, all thru small, invisible private sellers that have been secretly given the authority to sell as consignees for the NNPC. They all have their own banks and are required to make cash payments for their sale to a rotating set of banks the NNPC has for the stealth purpose of hidden sales.
But this introduces the opportunity for those with different ideas to enter the invisible marketplace with more nefarious intentions.
In addition, the oil business is a rather cash intensive business requiring large quantities of money that even most large companies can not get their hands on. So the potential of failure to perform both on the buy side and the sell side is much higher than many other natural resource markets.
We work to assist just a small number of sellers that are already performing with other buyers and have been doing so for many years. So they know what works and what will not work – what they can do and what they will not experiment with.
Because of this, these sellers will not be pushed into what can not work by anxious buyers.
Our firm, Nigerian Oil Services serves these sellers as the marketing arm, mandate and power of attorney (occasionally) to filter through literally hundreds of potential buyers to find the ones that are most likely to be financially capable and are also agreeable with the sellers working procedures and price.
We tend to see ourselves as solving the buyer’s problem. To do so we try and find out the buyer’s needs and designs at getting product and then solve those challenges.
We do this by introducing a safe procedure for the buyer to be able to move forward.
In a general sense, nothing is verifiable prior to the lift in the off-OPEC Nigerian market so we do our best to make sure the buyer has a loaded vessel to look at prior to asking for a banking instrument or payment of any kind; including payments the buyer is required to make to his own bank for their participation.
This method tends to favor more financially capable buyers and requires greater banking participation for lessor qualified buyers.
We would be happy to engage in communication which could lead to your buyer receiving some of the best feed stock in the world.
Please go to our registration page to enter the process.
Jeff Scott – Author – CFO