Other Things Equal The Financing Of A U.S. Export Transaction Fraud in Nigerian Crude Oil Selling: Authenticating The Crude Allocation and Documents by Oil Buyers

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Fraud in Nigerian Crude Oil Selling: Authenticating The Crude Allocation and Documents by Oil Buyers

How can you be sure that a Nigerian crude oil seller’s allocation or document is authentic or genuine?

An August 2010 investigative report on the matter by the New York-based non-profit Africans in America News Watch summarizes the issue:

“There are many genuine crude oil sellers in Nigeria but the problem is getting genuine and verified. Crude oil trading is a booming and thriving business and many people want to go into it. Buyers from other countries approach sellers in Nigeria. Order to buy Nigerian crude oil. [But the business is now full of]… Scammers. It adds that “there are many crude oil sellers in Nigeria, but the challenge there is the ability to find genuine and verified sellers.”

Indeed, as this author has documented elsewhere in another study, today’s scenario in the mysterious world of international crude oil buying and selling is literally dirty and crawling with frauds and scammers, now well established. There can be no serious argument or controversy in the contemporary international oil buying and selling industry.

In conclusion, given the stark reality that “there are many genuine crude oil sellers in Nigeria but the problem is getting real and verified”, the big million dollar question is: As a crude buyer, how do you get those sellers? Who are the “real and proven” people out of the whole lot?

True? Most experts, in the case of Nigeria, say that basically you (crude buyer) have to ask the alleged seller to show proof of actual BLCO and FLCO allocation from the NNPC of Nigeria and other proofs. Proof that the product is still available. (For Nigeria, the NNPC, which is the Nigeria National Petroleum Corporation, is a federal government-owned company that manages the purchase and sale of petroleum, including allocation to actual sellers of crude oil in Nigeria).

Key documents on the Nigerian crude oil buying/selling industry

There are some key documents that are important in the procurement of crude oil transactions in Nigeria. They will include the following documents, among others:

– Seller’s shipping documents, such as: Clean Ocean Bill of Lading; Seller’s commercial invoice

– Evidence of the seller’s product (will include license for export and approval of export, issued by the government of the country, details of product availability, port storage agreement, etc.)

– SGS/Sayboat certificate of quantity and quality issued at loading port

– Certificate of Origin issued by NNPC

– Certificate of Authenticity issued by NNPC

– Charter party agreement on the vessel, issued to the charterer of the vessel and possibly showing that the vessel is actually chartered in the name of the designated seller.

– Q88 questionnaire, filled in by ship managers providing relevant information and ship specs;

– Etc.

Proof of production

Perhaps the most important document that a raw buyer will need to see from a seller is the Proof of Proper Production (POP). This document, which must be issued by the appropriate department of the NNPC in Abuja, Nigeria, serves as a clear indication to a crude buyer that the owner of the oil commodity has actual ownership of the product, and also serves as an indication. That, at least at the time of the transaction (but only at that time), the seller has the item available for sale.

Important: It should not be any form of POP though. It needs to be in a format that enables satisfactory authentication to ensure that it is valid and authentic. Based on this author’s research, to ensure the optimal possibility of achieving this goal, there are basically two types of POP documents that are acceptable, and no others, and only vendors whose POP documents must meet those “preferred” POP document standards. to entertain or attend.

A POP must meet the following conditions.

a). It must have loaded ship documents that are current (ie, not more than 2 days old, otherwise the document will be immediately discarded as it means the ship is no longer available) and must include the following documents:

i Current Authority of Board (ATB). The seller must provide, for inspection by the buyer, the ATB that was specifically issued to the initial buyer (consignee) of the crude oil in whose name the vessel was issued. The name on the ATB must exactly match the name on the POP and other documents named here. And, here again, the ATB must be current – that is, it must not be more than 2 days old. (An ATB that is more than 2 days old should automatically be seen as representing a vessel that is no longer available and therefore not acceptable).

ii Quality Certificate.

iii Certificate of origin

iv cargo manifest

v. Voyage Report

vi Certificate of quantity.

vii Bill of Lading

viii ATS (Authority to Sell) from NNPC

b) Provide vessel details.

Generally, the buyer will need (and therefore the seller must be willing and ready to issue them), ship details such as the following: ship name, ship location, IMO name, call sign and other ship details. This is necessary so that the buyer can track the loaded vessel, and ensure its current availability.

C) Provide these documents, also, from NNPC

As in the case of POPs that reputable buyer facilitation organizations such as Reliable Dealing International require before any AWR seller can begin doing business with them, other things that are often required from a seller will include:

= Lifting lease/license from NNPC, and

= Letter of Authorization to Sell (ATS) from NNPC. The Letter of Authority to Sell, also known as the Letter of Allocation, which should usually come from the Crude Oil Marketing Department of the NNPC, is basically an official document that shows that the buyer actually has the right to the crude oil from an official government agency. The product he sells. (Normally should be in paper format and on NNPC company letterhead; should include the date of issue and expiration date, and should be signed. Scanned copies of documents are fine. All documents must be attested, valid, authenticated and verifiable.)

= If, for example, the seller claims that the cargo is empty, he should usually be able to provide the CPA (Charter Party Agreement), ATL (Authorization to Load), and Q88 ship details.

OK, but how can you be sure that these documents are authentic?

Ok, so let’s say you have gathered the proper proof of production and other necessary documents mentioned above. There is one key, practically critical, question that still remains for you – how do you ensure that these documents you receive from the vendor are also good? Are they genuine, legitimate, authentic and genuine to warrant you taking the seller’s offer seriously?

This question is, perhaps, most important to a buyer because, as a rule, most fraudsters and con artists operating in the Nigerian crude oil industry, are simply skilled forgers and copycats of every bit of legitimate industry documents that are used. in sales and procurement functions by refineries and government agencies, and who are highly skilled in the craft. Consequently, buyers are strictly cautioned, never, ever to directly accept at face value or ever be fooled, any document submitted by sellers or claims made by them, no matter how convincing or genuine they may seem! And what all this means is that crude oil buyers and their associates must urgently develop and have some good, fool-proof, tools or skills by which they can independently verify the authenticity of at least the key, sellers and their agents. One of the most important documents that most often present while hawking their products. And, above all, that they must have the skill and knowledge and professional sophistication to be able to discern which of such documents are genuine and legitimate, and which may be plain forgeries.

To be sure, such verification and confirmation can often be problematic for the buyer. However, it is not really a difficult task, at least for trained and experienced eyes. You need to know what and what to look for, the right questions to ask, and how to counter check and cross check facts and information. And, in any case, when in serious doubt about the authenticity of a document, you should always take the path of caution – ask for additional proof, or decline the offer, depending on the specific facts at issue in the offer.

For follow up

Do you want to follow up on how you can ensure that a Nigerian crude oil seller’s allocation or document is authentic or genuine?

Please see the instructional information in the author’s resource box below

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