tanker2020:
Not too many are aware that they can actually ’make a killing’ in any season in the Nigerian Petroleum downstream sector. Yes, it’s a known fact that people and organizations in the Nigerian petroleum downstream industry are making it big time but most spectators don’t know how the systems works.

There are different segments of the Nigerian petroleum downstream sector you can invest in and get a mouth-watering return on investment if you come in first having in mind to trade and deliver service swiftly and efficiently as you possibly can.

This is indeed a time for Nigeria and the citizens to do a re-think because it will never be business as usual. Professor Charles Soludo a former central bank of Nigeria governor, corroborated this when he said that the way we work, socialize, meet and greet after the Covid -19 crisis and that it wont be the end of techno -economic disruptions or health pandemics even in this decade. He said that ''this is an opportunity to "think without the box"- to engender greater confidence in our capacity to think through our problems, with authentic sustainable solutions". According to him, Africa including our dear country Nigeria, that both the government and her people are begging for palliatives.'' And the question i ask is ; Why beg to feed when there are still lots of lucrative sectors willing to accommodate you even in this period.

The essence of this write up is for a preliminary expose’ on the systems of some segments in the Nigeria petroleum downstream sector. However, some may read these submissions and still ask how all of these affects them. But i will like to state the obvious that at the moment , survival is of utmost importance in the minds of most if not all as it stands irrespective of status.

According to the Bureau of National statistics, Nigeria’s unemployment rate stood at a six year high of 23 per cent in the third quarter of 2018. As per the data on unemployment of 2010 – 2019, 3.5 million Nigerians as at 2010 were unemployed and it increased to 21 million in 2018 and by 2019, it had hit 23 million. If I may ask a question, when what you have today as a job, or what you call business is taken away from you, what else will you be able to do like immediately? Think about it and keep the answers to yourself as there is a popular adage in Igbo land that says: “No man goes climbing asking someone to put water on the fire for him with the intention of falling off the tree.” Agree with me if you will, being wary of the inevitable is not cowardice.

A Daily Post publication of 2nd May 2019 quoted the Minister of Labour and Employment, Senator Chris Ngige during a workshop saying that it is projected that the unemployment rate for Nigeria will reach 33.5 per cent by 2020 with consequences that are better imagined if trend is not reversed.
The fifteen years i have put in the Nigerian Petroleum downstream sector with regards to shipping logistics is no where near the over 40 years many have put in the industry. But the desire to share my experience is my motivation and since you are still following, let us give a breakdown of these segments of the Nigerian petroleum downstream sector that you can invest in and join the lots who are currently making it big time despite the disruptions caused by the Covid-19 pandemic.

Please note that in spite of the past, current and future positive outlook of the sector, I have been told severally by skeptics and cynics that it is short-sightedness and completely lacking in vision to see a future in the Nigeria Tanker Shipping Industry in a world of emerging renewable energy, fast rising world mobility leading to the production of electronic vehicles, the near completion of the Dangote refinery at Ibeju Lekki Lagos and the Nigeria National Petroleum Corporation (NNPC) ongoing turn around maintenance of the four (4) refineries in Nigeria. As we progress, i will highlight the reasons the industry will continue to thrive notwithstanding improvements in world eco-innovations or challenges caused by covid-19 pandemic or any other crisis for that matter.

I would like to let you know that there is something worthwhile in there for everyone irrespective of your financial capacity and class in the society.There are over twelve (12) segments in the sector that i would want us to talk about but let us begin with the Trading and Marketing Segment.

The trading and marketing segment is one segment I consider to be bigger than other segments in the Nigerian Petroleum downstream sector apart from the refining of petroleum crude oil. The players; foreign oil traders and local petroleum marketers are responsible for the purchase, marketing and distribution of the products gotten from crude oil.

(A) Foreign Oil Traders: They are the ones given the responsibility by NNPC (Nigerian National Petroleum Corporation) to bring in petroleum products into the country. They have a running SWAP deal with NNPC/PPMC(Pipeline and product Marketing Company). They were awarded contracts under the Direct Sale Direct purchase (DSDP) agreement with NNPC/PPMC. Under this agreement, they offtake crude oil and in return, deliver corresponding petroleum products of equivalent value to NNPC subject to the terms of the agreement. They are buyers at some point and sellers at another time. They are mostly foreign companies but domiciled here in Nigeria. Some of them are; British Petroleum (BP), Trafigura, Vitol, Total International, Bono Energy, Mocoh SA & Mercuria Energy. The ineffectiveness of these companies will definitely lead to the scarcity of petroleum products in Nigeria. They hire vessels abroad from their owners, load them with petroleum products and she sails for the ultimate arrival at Lagos offshore where she is then programmed by PPMC for discharge Via Ship to ship (STS) or at any of the berths at the inner anchorage.
(B) Oil marketers: These are indigenous oil & gas companies. They are well involved in the local marketing and distribution of petroleum. They either own jetties with tank farms or uses the storage facilities of other marketers for cargo storage purposes. They buy products directly from foreign oil traders and sometimes from NNPC/PPMC through the PFI system, a loading allocation given to local oil marketers to buy and load petroleum products from PPMC coastal and import vessels offshore. Some of the local petroleum marketers are; A.A Rano,RainOil, AYM Shafa, Masters Energy, Asharami Synergy etc. PPMC sometimes reach a throughput agreement with some of these oil marketers to store up their products in the marketers’ tank storages at a cost per ton for the period of storage.
When products are bought by these local oil marketers either from PPMC or directly from foreign oil traders, a vessel is chartered from ship owners locally or abroad for the purpose of proceeding offshore alongside the import tanker to load the cargo paid for. Prior or most times upon completion of loading, the oil marketer appoints a shipping port agent whose responsibility is to monitor the loading and ultimate discharge of the cargo either offshore or at berth. Both foreign oil traders and petroleum marketers appoint ship agents to berth vessels on their behalf depending on drawn programs for the vessels.
Foreign oil traders and local petroleum marketers in consortia throw in bids for Nigeria’s annual swap deal tenders for crude offtake and delivery of refined products. Only companies with the capacity to supply petroleum products to the country are considered for such contract award. These companies’ off-take crude and in return deliver corresponding petroleum products of equivalent value to NNPC.
I know you must have started thinking by now that how on earth will I be able to invest in this segment of the industry.
Remember I said earlier that there is something for everyone irrespective of your financial status or class in the country. What I am saying today may not be for everyone just as this segment of the sector isn’t for everyone. But I know that if you don’t have it or can’t have it, you may know someone who can.
The tender to off-take crude in return for petroleum products opens up every year as the one currently running expires on the 30th of September 2020.
Let us take a look at this segment, digest the information here,come up with questions if necessary and give our inputs as well if we so desire.

I will be right back.

Tanker 2020

tanker2020:
2. SHIP OWNERSHIP OR MANAGEMENT
Please don’t say; what the heck? Where on earth does he expect me to get funds for the purchase of a vessel just to be a player in the Nigerian petroleum downstream sector?
The Nigerian Petroleum downstream industry is not exclusively for the rich rather,it enriches all players, especially those who are ready to trade and give service as per industry demand.
Without a ship, the Nigerian petroleum downstream industry cycle will be incomplete. Foreign oil traders or importers and local petroleum marketers charters or hires vessels from ship owners and use them for the loading of petroleum products such as Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Dual Purpose Kerosene (DPK) and other product for subsequent discharge at disports. These ships are either chartered from owners, managers or operators either on a voyage or time charter. Conditions for chartering vessels are sometimes dependent on the size, age and by extension, the allowable loadable draft of the vessel.
There are two basic types of Oil tanker vessels; Product tanker and Crude tanker.
There are VLCC (Very large crude carriers) and ULCC (Ultra Large Crude Carriers) These are vessels used for the loading of crude at terminals.
Product tankers which are usually medium range (MR), Long range(LR) 1, Long Range 2 vessels are used to load petroleum products such as PMS, AGO, DPK or Jet A1. The daily charter rate for product tankers in Nigeria ranges between 10,000 to 20,000 US dollars per day depending on the age and size of the vessel. For instance, a vessel with about 50-52 dead-weight can load up to 30,000 metric tonnes of cargo which could be about 30 million liters depending on the nature of the cargo in question. Such vessel size in brand new could be sold between 40 million to 60 million US dollars and a fairly used one depending on the age will go for far lesser that amount.
However, whichever angle we all decide to look at it, and whatever may be running through our heads at the moment because of the amount involve, please know it that you must not be the ship owner for you to be the ship leaser to charterers. You can play the go-to-guy role or person who should be contacted whenever there is need for a vessel to be chartered by oil traders and marketers and this is possible by merely knowing someone or company that owns a ship. You are not a ship broker per-se but a contact person that is seen by many as a ship owner or operator. Your most valuable asset in this regard is the ability to create a good relationship with local or foreign ship owners and the ability to convince a first-time charterer to charter your vessel.
Apart from linking local petroleum marketers with ship owners and providing charterers with vessels for a commission, the go -to- person packages available ships’ documents for the purpose of throwing in bids on behalf of ship owners whenever NNPC/ PPMC open tender opportunities for the supply of coastal vessels. Awarded contracts runs for 2-3 years prior the opening of another tender opportunity. All a go-to-guy, who has no ship needs is to know a ship owner anywhere in the world and as long as he or she is able to convince the vessel owner of the investment opportunities in the Nigerian Petroleum industry with regards to the NNPC-PPMC tender opportunity for the supply of coastal vessels to them, he is good to go.
Charter party agreement cost of chartering a vessel from ship owners under tender of this nature is usually between 15,000 to 20,000 us dollars for vessel per day depending on the age and size of shortlisted vessels.
Like i said earlier, don't panic. This may sound and look big but what is actually big here is your earnings nothing more.

I will appreciate your questions if necessary and contributions if you so desire.

Will be right back.

Tanker2020

NairalandAngel:


Are there any Nigerian companies that actually own tankers?

tanker2020:
Quite a number of them. Matrix Energy a Nigerian indigenous Petroleum company own and at the same time are the operators of Matrix Pride, Matrix Asa, Matrix Triumph and Matrix S. Ilu. There are other locally owned vessels like MT Oluwaseun, MT Ayodeji owned by Azimuth shipping , MT SL Aremu just to mention a few of them.

SavageResponse:


It is not only foreign companies that are licenced to trade crude oil in Nigeria.

Have you heard of Levene Energy before?