* Nigeria's state oil firm says oil fraud rising
* Flaws in oil tender documents raise suspicion
* System of oil sales seen as opaque, open to abuse
By Emma Farge
GENEVA, (Reuters) - Little-known firms claiming to have privileged
access to prized sweet crude oil from Nigeria are offering to sell it at such
deep discounts that traders say the deals are too good to be genuine.
Documents seen by Reuters show spot cargoes of several hundred thousand
barrels of crude can be picked up at discounts of up to $10 million.
But the documents are suspiciously flawed, suggesting the financial scams for
which Nigeria, Africa's most populous nation, is notorious have spread to its
State oil company Nigerian National Petroleum Corp has placed a "Scam Alert"
on its website warning of "unsavoury characters purporting to be bona fide staff
of the NNPC or contractors to NNPC or purchasers of Nigerian crude oil or
contractors to the Nigerian government".
The sellers include one UK-registered firm purporting to be near the top of a
sales chain in which oil cargoes can change hands up to half a dozen times
before being refined.
Two of the firms contacted by Reuters said they were able to sell oil cheaply
because of special access to NNPC contracts.
The documents point to the difficulty faced by Nigerian President Goodluck
Jonathan in making reforms when there is considerable doubt over who is
responsible for selling the oil.
Nigeria has pledged to take measures to fight corruption in the oil sector
after a hike in state-subsidised petrol prices sparked mass protests in
One recent step has been the creation of higher barriers to entry for
participation in NNPC's 2012-2013 term allocations. The results have not
appeared since the initial tender document was released in March.
On Tuesday Jonathan sacked the managing director of the NNPC and three other
"To further strengthen the ongoing reforms ... and in furtherance of efforts
to achieve greater transparency and accountability ... President Jonathan has
approved the re-composition of the executive management team of the NNPC," an
official statement said.
Alexandra Gillies, governance adviser at Revenue Watch Institute, said the
proliferation of middlemen involved in selling Nigeria's oil since Jonathan's
election last year had resulted in considerable uncertainty over
"If NNPC only issued term contracts to companies with the capacity to lift
crude, then nobody would be able to pose as a company flipping (reselling) a
cargo. The confusion is a symptom of Nigeria's sub-optimal system for selling
its oil," she said.
A report that government-funded watchdog the Nigeria Extractive Industries
Transparency Initiative (NEITI) sent to the authorities in January showed
billions of dollars missing from Nigeria's oil revenues.
TOO GOOD TO BE TRUE?
Five written offers reviewed by Reuters show a close resemblance to official
paperwork circulated among traders, including documents attributed to NNPC,
stamps from terminal operators and shipping lists with vessels and loading
They include arcane oil market jargon such as 'laycan', which refers to the
timeframe for loading and 'STS' meaning ship-to-ship transfer of the
One shipping list showed a tanker called the 'Elsa Craig' - a name close to
an actual Panama-flagged crude oil tanker called the Ailsa Craig 1 - next to
other cargoes booked by western oil majors such as Chevron.
"They are full of imagination," said a West African oil trader, commenting on
A second oil trader with a London-based oil firm suspected that some of these
offers were attempts to resell the oil siphoned off by thieves in the Niger
Delta, since the majority of offers were for the local grade Bonny
"A lot of this oil on the side may be bunkered (stolen) and does go to people
in the Delta to sell. It's a side business and I think some buyers are doing
good business there," he said.
A third oil trader said he had considered buying a cargo from an Abuja-based
company called Sunny Industrial Lubricant but rejected it only after a member of
the compliance team noticed a flaw in the NNPC logo.
NNPC's logo - a green, red and yellow wagon wheel - has 20 spokes compared
with 22 on this document.
"We discovered that the logo was not fully accurate. It's difficult to
distinguish and it's a big risk," said the oil trader who asked not to be
When contacted by Reuters via email, the firm's chief executive, Sunny Eze,
said he was able to gain access to oil produced in excess of Nigeria's official
OPEC production target, known as 'off-OPEC' crude.
"Our company outsources crude oil for buyers from NNPC bulk allocation,
otherwise known as OFF-OPEC. We are using our strong influence with NNPC JVC to
outsource and deliver products to interested buyers," he said in an emailed
response to Reuters' questions about the company. OPEC has not assigned
individual OPEC country quotas since last year.
Another firm, the UK-registered Current Energy, said in an offer letter that
it was reselling 5 million barrels a month of the benchmark Bonny Light grade
obtained from an NNPC contract holder at $6 a barrel below the market
This amounts to a saving of $6 million per cargo, about 7 percent on a cargo
that would currently cost around $90 million.
Reuters shipping data showed that 4 million to 8 million barrels of this
grade, sourced from the Niger Delta, have been available for export monthly this
When contacted by Reuters, company director Akin Aboaba said he was reselling
oil obtained from an NNPC contract holder who had received the oil to compensate
for oil spills from regional pipelines.
Nigeria's oil is sold by equity holders including oil majors Total and Royal
Dutch Shell, which have a stake in production and via term contracts handed
mostly to oil trading firms.
The large number of companies involved in selling oil via term contracts
means it can be tough for even experienced traders to tell the difference
between real and fake offers.
Industry sources said the number of companies selling Nigeria's oil increased
dramatically after Jonathan's election as part of a strategy to broaden local
participation in the country's oil sector.
But critics point to this as an example of the cronyism that is helping to
buttress support for Nigeria's political elite.
"It will be interesting to see whether the issuing of the latest crude tender
to include Nigerian companies is a return to the political patronage of the past
dressed up as increasing Nigerian content," said an oil industry consulting
source in Nigeria.
Under every new regime, military or civilian, the list of those authorised to
sell Nigerian crude is usually torn up and a new one issued to include friends
of the new government.
Last year's allocation list showed a considerable increase in recipients from
2010 and had more than 40 names ranging from top commodities trading houses such
as Glencore and Trafigura to little-known Nigerian firms including Masters E.
"NNPC makes a lot of decisions in an opaque way, without much oversight ...
Politics and discretion likely play a big role," said Revenue Watch's
Term contracts allocated to oil firms without the know-how or logistics to
handle multi-million dollar oil shipments are often re-sold or "flipped" to
other traders, industry sources said, making it hard to verify who really has
oil to sell. (Additional reporting by Joe Brock in Abuja; editing by James
By George Agba
President Goodluck Jonathan yesterday described Nigeria as the only country in the world where crude oil is stolen at an alarming rate, saying the situation has reached the stage of a full-blown cancer.
He also said he has not decided whether to run for the presidency in 2015, as he needed more time to attend to security and economic matters plaguing the country before thinking of 2015 politics.
While responding to questions at a "Presidential Media Chat" televised live last night, Jonathan said while the issue of whether he will seek a second term in 2015 was overheating the country's political environment, "it is not proper for a Nigerian president to make comments on 2015 at this stage".
Hinting that he would make his decision public by the end of 2013, the president urged Nigerians to allow him to use two years-plus to tackle economic and security issues. He cited a country like Ghana where, he said, things are haphazard because, right from day one after their general elections, campaigns begin in top gear for the next one.
"Let us leave 2015 issue. When INEC opens the gate we will know who is to contest and who will not contest," he said, adding that he should not be dragged into making statements that the media could begin to mis-interpret the next day.
Expressing worry over crude oil theft in Nigeria, Jonathan said: "The stealing of crude oil appears to be in Nigeria. It is not happening elsewhere. It is like a cancerous cell. A cancerous cell starts developing somewhere in your body, either in your prostate region or in your breast and they won't notice it still; or probably when they notice it, they think that it is ordinary boil. It gets to a point where, when they know, they cannot control it.
"We have held serious meetings between security services, the private sector like Shell and all the key oil players. We have been holding meetings. They will have to stop it. But it is like allowing a cancerous cell to develop a major tumour that even spreads to the critical organs. So, we need stronger effort. We need to spend more money than to spend more days in the hospital. That is where we are. We will crush it; we are on it. Because there is no county where they are stealing crude oil the way they are stealing in Nigeria."
Noting that classifying the stealing of crude oil as oil bunkering was not proper, the president said, "the word bunkering I knew when I was in the customs in Port Harcourt, happens in a way that when ships come, there are big companies that are legalised to go and sell them in water. But, here, somebody goes there to open a pipe and steal crude oil and they call it bunkering. I don't know whether, technically, it's bunkering. I call it crude oil stealing. It is not bunkering. Those who still crude oil are thieves. They are common criminals."
Nigeria not broke
The president, however, disagreed that Nigeria is broke, even as he said the country boasts about N34 billion in its foreign reserves. "If we are broke, nobody will come and invest here. The Chinese will run away, the Indians will run away," he stated.
Why I sacked Azazi, Bello
Jonathan also opened up on why he removed his former national security adviser, General Andrew Azazi, and erstwhile defence minister, Dr Halliru Bello, saying the changes became necessary to meet up the standard of security operations in the war against terrorism in the country.
Although he noted that Azazi's removal was not as a result of incompetence, the president implicitly hinted of the former NSA's failure when he pointed out that he would continue to "make changes in the security apparatus to make it more responsive to the exigencies of the moment".
According to him, the removal of Azazi as NSA was part of such changes and adjustment to meet the standard in security operations in the country.
On his official visit to Brazil when the country was on fire following the reprisal attacks that trailed the bombings of churches in Kaduna and Zaria, killing over 70 people and injuring about 100 persons, President Jonathan stated vehemently that he did not regret attending the UN Earth Summit in Brazil, saying he will not allow terrorists to stop him from functioning as a president.
According to him, the aim of terrorists anywhere in the world is to disrupt the government and stop the president from functioning.
He said, "If I had panicked and was stopped from travelling to Brazil last week, the terrorists would have achieved their main objective and a wrong signal would have been sent out to the international community that even the president is being held hostage. The day the international community gets to know that the president of Nigeria is tied down because of Boko Hram, then, we are finished.
Boko Haram can't bring Nigeria to its knees
"When I was in Brazil, I got a lot of calls from Nigerians expressing worries that the country was burning and I went out of the country. People who got worried that I travelled got worried out of ignorance. The day the international community knows that the president, the vice president or Senate president cannot travel because of Boko Haram, then, we are finished. Boko Haram cannot bring this country to its knees."
Noting that he will not let terrorism weigh his government's activities and programmes, he noted, however, that he would be ready to engage in dialogue with members of the terrorist group if they show their faces, adding that since they are Nigerians, he would not want any of them to die.
We're ready for dialogue with sect
Expressing his readiness to engage members of the Boko Haram sect in constructive dialogue and, if possible, send them for training anywhere in the world so that they would contribute to the development of the country, the president promised to continue to encourage people like Dr. Datti Ahmed to facilitate dialogue with the terrorists.
He refused to say why he promised that terrorism would be brought to an end by June that saw Boko Haram activities reaching top gear in the country. He maintained emphatically that the menace would soon come to an end.
I have confidence in Lamorde
On corruption, Jonathan said his choice of Ibrahim Lamorde as EFCC chairman was informed by the fact that he will be able to deliver and not somebody he could control. "Lamorde investigated me when I was governor of Bayelsa State. So, if I need somebody I should control, I wouldn't have chosen Lamorde. I have confidence in Lamorde."
On why he has not declared his assets, Jonathan said it is a matter of principle. He wondered why so many people bring issues and begin to play politics on them when it is not the president declaring assets that stops Boko Haram.
He said there is no difference between when he declared his asset as vice president now that he is president, adding that, even as vice president, he had acquired what he needed to acquire.
He said if he had something to hide in the ongoing subsidy probe, he wouldn't have brought Nuhu Ribadu, former EFCC chairman and presidential candidate of the Action Congress of Nigeria, to chair a task force, just as he disclosed that he had ordered the EFCC to go and investigate some bank accounts in US.
I won't witchhunt anybody over subsidy probe
Denying that he was not and is not part of any witch-hunt of suspended chairman of the House committee on subsidy probe, Farouk Lawan, Jonathan said if he had any plan to go after Lawan, he would not have used oil magnate Femi Otedola who is a businessman.
Explaining his closeness to Otedola, the president said most business men like Aliko Dangote had been members of the Economic Management Team right from the regime of former president Olusegun Obasanjo and they are not being paid, but they are always around the presidential villa for economic meetings.
I enjoys good relationship with National Assembly
He also said that he enjoys a good relationship with the National Assembly against insinuations that a cold war was brewing between the executive and the legislative arms of government.
He, however, added that it "is not as if there are no issues" between the executive and the legislature.
Reacting subtly to the recent invitation by the House of Representatives that he and his security chiefs should appear before it, Jonathan said, "There are some issues. It is in the National Assembly that the opposition show their relevance. They cannot come to ministry of education. If you invite the minister of agric to come 1,000 times to explain himself, it cannot stop him from doing his work."
Noting that people leave the substance to pursue the shadow whenever they criticise him, Jonathan said he is a calm person who is being misunderstand by a lot of people. "I am such a person that even you are telling me rubbish, I will sit down, calm and listen to you even if I know you are talking rubbish," he said.
Asked whether Nigerians should still trust him, Jonathan answered in the affirmative, just as he ruled out criticisms on social media against his government, saying most of he criticisms against him on social network always come from one source.
He said, "One person can replicate a message many times and people begin to think that the whole country hates you. I told people working with me that they should close their ears because people will abuse you, but by the time we get to 2013, people will begin to appreciate what you are doing".
Likening Nigeria to a forest, the president said he had given himself 12 months for Nigerians to abuse him. "They have not even been abusing me much, but by the time you begin to see the outcome of what we are doing, they will begin to appreciate," he stated.