4 PROBLEMS OF FINDING GENUINE BUYERS AND SELLERS OF AGO/DIESEL IN NIGERIA

In dredging, a lot of diesel or AGO is consumed, most dredging sites consume more than 33,000 liters depending on the number of dredgers working. Previously, I have written on Diesel (AGO ) procurement/supply which reveals how to create wealth through procurement of AGO. If you can supply up to 3 dredging sites with diesel monthly you will definitely become wealthy. 

It is not all rosy in this line of business, series of problems can arise.

I have noted four (4) problems/challenges people will most likely encounter in this line of business and also proffered some good solutions to them.

"The oil industry in Nigeria is so corrupt that even locals get scammed. I am saying this because I know several businessmen and a diplomat from Nigeria who were scammed. If you don’t work directly for a refinery or an oil company, you are most likely a victim of a scammer who wants the buyer to pay a “fee” upfront". 

This is the general perception of individuals as regards oil trading business in Nigeria today. While this statement may be hurtful it has proven to be quite true but there a ways to avert being defrauded in this business.

So how can one identify a genuine AGO buyer or seller in Nigeria?

1). Genuine sellers in Nigeria are given allocations from the NNPC, which is the body that regulates the Nigerian petroleum industry. The first step to verify the authenticity of an AGO seller then, is to ask to get their allocation details for verification. A failure to produce this can mean the seller is not a real OPEC seller. Besides, all OPEC sellers in Nigeria have their names published on the news yearly.

b) Generally,  to verify genuine sellers in Nigeria, seller's NNPC licence and allocation details will be sent to buyer for same day verification from NNPC online. This step is a very important step in other not to get scammed.

OFF-OPEC sellers on the other hand are not registered but have the ability to lift crude on PLR basis. After the buyer has placed a financial instrument, any genuine OFF-OPEC seller would get a verifiable Laycan that shows they have a lifting schedule in place. Some of these sellers would be willing to post an upfront performance bond (usually 2%) to give the buyer comfort.

Note: Most buyers request for proof of products as soon as SPA is signed. This can work with OFF-OPEC sellers because they buy from International waters and already have products available but OPEC sellers or NNPC Fiduciary sellers can not provide proof of product they can only give buyer their license and allocation details for verification.

2). Be wary of sellers asking for upfront payments. Many, if not all of them, are fraudulent and will make you lose your money faster than you’d realize.

3). Ensure you speak with the  seller over the phone to ask a series of questions. Replying emails is not enough. If possible, it is best for the buyer to get to eventually meet the seller in person. This is a whole lot safer than just remote conversations.

4). Upon clearing the cargo, the seller should be able to provide the full verifiable cargo documents. If the documents sent are not verifiable, then you know there’s a problem already.

Typically a genuine seller's procedure should look like this:

PROCEDURE FOR AGO-TTO TO GHANA

1) NNPC fiduciary Seller send Contract (SPA); Buyer sign back Contract (SPA).

2) Buyer sends to Seller NOR/ATB Format.

3) Buyer's bank sends SBLC/BG for full cargo OR MT799 Block Fund by SWIFT in Favour of Seller for (US$1,000,000 USD) for Logistics.

4) Seller issues buyer NOR/ETA and Marine ATB / Clearance to buyer.

5) Seller instruct loaded vessel Captain to move loaded vessel to Ghana Waters and Position for buyers Confirmation of Product / Q&Q.

6) Within 24 hours after Confirmation of Product by buyer supercargo/inspector, buyer Unblocks/Pays (US$1,000,000) to Seller's Bank Account for Logistics. 

7) After buyers Q&Q, and SGS report released, Buyer under 24-hours, makes full MT103 Cash Transfer Payment for Total Quantity/Product to Seller and All Agents Concerned in the Contract (SPA), less (US$1,000,000 USD) released for Logistics.

8) After Confirmation of Buyer's full Payment by Seller and All Agents Concerned in (SPA), buyer re-charters vessel.

The truth is finding genuine AGO sellers in Nigeria and genuine AGO buyers in Nigeria that are willing to both agree on a procedure and price can be difficult. But ensuring both parties are able to come to a reasonable agreement is key to closing as many credible transactions as possible.

Closing oil deals is hard, whether AGO or crude oil, buyers and sellers go around in circles and waste a lot of time in the process. A lot of AGO deals never close because of a disagreement in price and/or a disagreement in the transaction procedure between parties.

To get genuine AGO sellers in Nigeria that can deliver to tank farms, vessels, and even organizations in any part of the world from 20,000mkmt in quantity upwards contact the dredge consultant at contact@chineduetokwudo.com.ng or chineduetokwudo@gmail.com