Friday, October 9, 2015

Beware of signing Nigerian ‘Letters of Comfort’ - P&I Club


Tanker owners should not provide a ‘Letter of Comfort’ to the Nigerian National Petroleum Corporation (NNPC), a leading P&I club has advised.
This letter potentially exposes owners and operators to huge liabilities and, although it is appreciated that some may choose to provide the letter for commercial reasons, P&I cover may be compromised as a result, the Standard P&I Club warned.

Furthermore, providing such a letter to charterers is unnecessary, as lawful conduct should be implied in any charter.
This problem has arisen, following the lifting of the ban on the 110 plus crude oil tankers calling within Nigerian waters. NNPC has now said that it requires ‘Letters of Comfort’ to guarantee that the nominated vessel will not be used for any illegal activity in Nigerian territorial waters.   
It was believed that this letter was being requested from terminal operators and cargo interests rather than owners/operators. However, some owners are being asked to sign and send this letter to NNPC and/or to provide these onerous and wide ranging guarantees directly to charterers, the club said.

INTERTANKO’s Documentary Committee has discussed this issue and advised:
Do not sign any ‘Letter of Comfort’ addressed to NNPC.
Letters of Comfort to charterers are unnecessary. If charterers insist – use INTERTANKO’s model ‘Letter of Comfort for Nigeria Trade’ wording, or similar, and seek a back to back ‘Letter of Comfort’ from charterers.
Use the INTERTANKO Nigeria Trade Clause in charterparties. This makes the charterer the party responsible for any documents which might be requested from Nigerian Authorities, which would include the ‘Letter of Comfort’.
Take care with Bill of Lading (shore) figures, which must represent the amount the Master reasonably believes he/she has on board.
Provide out-turn figures to the terminal whether requested or not.
The club recommended resisting providing a ‘Letter of Comfort’ as far as possible and, as recommended by INTERTANKO, it suggested that owners propose that the letter be sought from either the terminal operator or the shipper.
If charterers insist that a letter is provided and owners choose to comply for commercial reasons, the club suggested amending it so as to follow INTERTANKO’s model ‘Letter of Comfort’ for Nigeria Trade wording and obtaining a back to back ‘Letter of Comfort’ from charterers.
The wording is as follows:
‘The vessel XXXX  is contracted to load at XXXX with a laycan of XXXXX.

Owners confirm that the vessel will not knowingly engage in any illegal activities and will strictly follow any legal instruction issued in accordance with the terms of the charterparty.’
INTERTANKO has written to the NNPC to discuss this issue to try to persuade the company to drop this request, but thus far, there has been no response.

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