A Review of the Nigerian Energy Industry

Nigeria moves to enforce content act in crude oil transportation

Crude oil vessel27 August 2013, Lagos – In line with the provisions of the Nigerian Content Act, which stipulates that Nigerian crude oil should be transported with Nigerian vessels, the federal government, through the Nigerian Content Development and Monitoring Board, NCDMB, has moved to ensure compliance with the Act.

It was gathered that three years after the Act was enacted, no Nigerian vessel is yet involved in the transportation of the Nigerian crude oil.

The Nigerian National Petroleum Corporation, NNPC, had worsened the case of indigenous players when it attempted to effectively exclude indigenous companies from participation in the lifting of crude oil in the 2012/2013 guidelines, prompting the intervention of the NCDMB.

But due to the intervention of the NCDMB, the guidelines were revised to encourage local participation and interested applicants were required to provide commitment from prospective shippers to lift Nigerian crude, “that a minimum of five slots per cargo shall be set aside for ocean-going attachment of Nigerian cadets for the purpose of obtaining international certification”.

“Interested applicants must submit a memorandum of agreement (MoA) with shippers demonstrating a credible strategy to grow Nigerian equity in the tankers nominated to lift allocated Nigerian crude to 25 per cent by 2014 and 90 per cent by 2017. It should be noted that evidence of Nigerian equity in the nominated tankers prior to conclusion of the process shall give trader competitive advantage,” said the guidelines.

The guidelines also required interested applicants to submit a detailed Nigerian Content execution strategy to the satisfaction of the NCDMB, clearly setting out Nigerian Content commitments for subcontracting in some selected areas of the economy.

These areas include insurance and legal services; banking and financial services; training and capacity building and cargo inspection and survey.
Speaking recently at a conference organised by Energy Correspondents in Lagos, the Executive Secretary of the NCDMB, Mr. Ernest Nwapa stated that since the guidelines were issued, many indigenous players had demonstrated commitment to ensure that Nigerian-flagged vessels are involved in the transportation of the country’s crude oil.

Nwapa confirmed that no Nigerian vessel was yet involved in the transportation of the country’s crude, contrary to the provisions of the Nigerian Content Act.

He, however, disclosed that many Nigerians had approached the board with equity arrangements with reputable tanker owners aimed at ensuring the transportation of Nigerian crude with Nigerian vessels.

– This Day

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