NNPC gives nod for indigenous shipowners to lift crude oil

After several years of fruitless efforts to participate in the lucrative Nigeria’s crude oil affreightment, the hapless indigenous shipowners may now heave a sigh of relief as the hitherto recalcitrant Nigeria National Petroleum Corporation(NNPC) may have finally agreed to give them a window of opportunity to participate in the exercise.

The shift in its hitherto hardline posture followed the engagement of the Nigerian Maritime Administration and Safety Agency(NIMASA), shipowners and other stakeholders had with the NNPC top officials recently in Abuja.

At the forum, all the parties involved agreed it was high time there was a change in trade terms from Free On Board (FOB) to Cost Insurance and Freight (CIF) which would enable indigenous ship owners to begin to lift Nigeria crude and ultimately boost indigenous capacity.

At the interactive forum which was declared open by the Minister of State for Petroleum, Dr. Ibe Kachikwu, the Minister noted that the issue on this trade term is an aged long challenge that has lingered too far and charged participants to come out with resounding resolutions that would be of National benefit.

The Director General of NIMASA, Dr. Dakuku Peterside who presented a paper titled, The Imperatives of Changing Nigeria’s Crude Oil Affreightment Trade Terms From FOB to CIF pointed out that the Changing landscape of Nigeria’s maritime sector viz-a-viz its security architecture, capacity and other determinants has necessitated the Change now than ever before.

Dakuku stated further that the CIF if implemented will “encourage indigenous fleet expansion, lead to massive job creation for qualified Nigerian Seafarers, create opportunities for mandatory sea time experience for Nigerian cadets and build expertise and competence in international shipping trade”

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According to him “Nigeria is one of the major exporters of oil and gas resource in the world, and she averages an output of 1.92 million barrels of crude oil per day so this volume generates huge freight for carriers. Regrettably, Indigenous shipping operators have insignificant share of the freight earned from the carriage of Nigeria’s crude compared to foreign counterparts”. The DG lamented.

Dr. Dakuku also stated that OPEC nations such as Iran, Indonesia, Algeria, Kuwait, Angola, Venezuela, UAE and Libya allow indigenous operators to participate actively in shipment of the crude oil, stating that with the right policies in place Nigeria can build its own capacity and one of this is the change of terms of trade for Nigeria’s benefit.

Also speaking at the event the Group Managing Director of the NNPC Dr. Maikanti Baru stated that the Corporation does not have any reason not to allow Nigerians lift crude that there were conditions which made NNPC opt for the FOB trade. He however noted that the NNPC also sees benefits in the CIF trade term but processes have to be followed which may include transition period before finally opting for the CIF trade term.

Shipowners and major stakeholders who spoke at the engagement lauded the initiative. Barr. Temisan Omatseye a former DG of NIMASA who is also a Ship owner pointed out that there is a lot of benefit in the CIF trade term. He stated further that that it would eliminate crude theft, create employment and ultimately compliment the diversification drive of the Federal Government.

In the same vein, the President of the Ship Owners Association of Nigeria (SOAN) and Managing Director of Starz Marine Group, Engineer Greg Ogbeifun observed that what is needed to make the great CIF initiative to grow the Nigerian shipping industry and the economy is the needed Government support, which is coming at the right time, when the country wants it most to diversify the economy.

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All other stakeholders who spoke at the event including leading members of the Nigerian Shipowners Association (NISA) and Master Mariners unanimously agreed that the CIF trade term would be more beneficial to the country than the present FOB on which the crude lifting is currently based upon.

It could be recalled that the NNPC has for several years frustrated the attempts of the indigenous ship owners to break into the lucrative business of crude oil affreightment which has been in the vice grip of foreign carriers.

The NNPC has based its refusal to yield ground on its allegation that the indigenous carriers lacked the requisite technical capacity and necessary capital outlay which such business that is highly technical entails.

However, with the latest truce between both parties, it would be a matter of time before the local carriers break into the big league of crude oil lifting.