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NIGERIAN CRUDE OIL SCAMS

Participating in crude oil trading as with most serious undertakings, requires  that you have a working knowledge of the industry and a fairly decent understanding of business transactions per se. Crude oil trading typically involves vast amount of money and if not managed significant risks. Most of the risks fall into the category that can be hedged by a variety of financial instruments and whilst never guaranteeing a profit, they certainly prevent a catastrophic loss. In fact most financial counterparties and lenders would mandate the use of such instruments.

Those are not the risks I am contemplating. There is an increasing number of fraudsters purporting to have access to Nigerian crude at ridiculous discounts. Needless to say Nigeria very rarely if ever discount her equity crude and has no reason to do so. Many of these fraudsters will classify the crude as  'off OPEC' or offer transhipment as a method of delivery.

If you have been approached by parties purporting to have Nigerian crude and are uncertain, please feel free to contact us. We will confirm any such contracts within a matter of days

 

 

As Nigeria displays an acute petroleum dependency for its revenue, the government has understandably initiated a policy intended to boost the reserves to 40 billion barrels by 2011. One of the approaches to achieve this objective is the development of marginal petroleum concessions. Thisapproach may result in the introduction of 300 million barrels to the existing reserves. Nigeria’s marginal concessions’ fiscal regime stands to influence the success of the government’s objective.The 24 Marginal field operators in Nigeria are operating under farm in agreements with International Oil Companies from whose acreages the marginal field areas were carved out. The typical agreement calls for the farmor to receive some form of royalty from the farminee.

But in Nigeria's proposed new legislation, (Petroleum Industry Bill), these International Oil Companies will have to give up areas that are currently being operated by marginal field operators, according to the former Petroleum Minister, Mr Rilwan Lukman. “These areas will be given directly to these operators. This will allow them to get their own acreage and become masters over their own fields under favourable royalty and tax provisions “. “These contracts were granted without implementing a modern acreage management which typically includes strong relinquishment practices.

As a result, in Nigeria petroleum companies are “sitting on” acreage and there is no access to acreage for new investors In 2002 the Federal Republic of Nigeria embarked upon the licensing of 24 marginal oil fields containing about 300 million barrels of crude oil. Awards were made to indigenous companies in 2003. The prospects of the successful development and production of these fields rest upon the attainment of commerciality thresholds via oil price appreciation, and the propriety of the applicable fiscal regime.

One condition for the development of these fields is currently present - a high oil price regime prevails. However, the unpredictable and widely fluctuating nature of oil prices is such that the current regime cannot be solely relied upon to sustain the economic development of these fields. Accordingly, the propriety of Nigeria’s fiscal regime, as it applies to the marginal fields, comes into question.

 

 

Nigeria had an estimated 36.2 billion barrels of proven oil reserves as of January 2010. The majority of reserves are found along the country’s Niger River Delta and offshore in the Bight of Benin, the Gulf of Guinea and the Bight of Bonny. Current exploration activities are mostly focused in the deep and ultra-deep offshore with some activities planned in the Chad basin, located in the northeast of the country.

Over half of the country’s oil production is exported to the United States  and the light, sweet quality crude is a preferred gasoline feedstock. Consequently, disruptions to Nigerian oil production impacts trading patterns and refinery operations in North America and often affect world oil market prices.

The instability in the Niger Delta has caused significant amounts of shut-in production and several companies declaring force majeure on oil shipments. EIA estimates Nigeria’s effective oil production capacity to be around 2.7 million barrels per day (bbl/d) but as a result of attacks on oil infrastructure, 2008 monthly oil production ranged between 1.8 million bbl/d and 2.1 million bbl/d. Production in the Niger Delta is currently at an all time high with the Amnesty initiative appearing to reap dividends and a virtual cessation of militant activity in the region