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Monday, February 28, 2011
Crude Oil Business - How to Profile Buyers

If you would have to close a deal in the Oil and Gas business, then you must strive to apply a professional approach. As a seller, having a commodity without having anybody to buy is regarded as a waste. The essence of business is buying, selling and making profits. There are so
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Saturday, February 26, 2011
Thursday, February 24, 2011
Wednesday, February 23, 2011
Classifications of Crude Oil

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Crude oil otherwise known as petroleum (from Greek: petra (rock) + Latin: oleum (oil)) is a composition of hydrocarbons (chemicals composed solely of hydrogen and carbon in various molecular arrangements) and other compounds which is usually brown or black in color.

It is extracted from the earth, formed naturally from the fossil of animals and plants. The viscosity and relative weight of crude oil varies and it can exist in either liquid or solid state.
The different types of crude oil are classified based on the American Petroleum Gravity (API) gravity and viscosity. The properties may vary in terms of proportion of hydrocarbon elements, sulfur content etc as it is extracted from different geographical locations all over the world.

Light crude oil is defined as having an API gravity higher than 31.1 °API
Medium oil is defined as having an API gravity between 22.3 °API and 31.1 °API
Heavy oil is defined as having an API gravity below 22.3 °API.

Classifications are made based on the sulfur content as well. Crude oil with low content of sulfur means 'sweet' and the presence of high content sulfur is known as 'sour'.

One of the largest and major Classifications of Crude oil is Brent Blend, which is found in the North Sea. With an API gravity of 38.3 degrees and 0.37% of sulfur, this blend of crude oil comes from 15 various oil fields in the North Sea.

West Texas Intermediate (WTI) otherwise known as Texas Light Sweet, OPEC Reference Basket (ORB) and Dubai Crude are other major benchmarks or references. The deposits for West Texas Intermediate are found in Texas and Mexico whereas for OPEC Reference Basket oil is sourced from Bonny light (Nigeria), Arab light (Saudi Arabia), Basra light (Iraq), Saharan blend (Algeria) and Minas (Indonesia). Although, Brent blend is graded as a light crude oil, it is not as light as WTI.

Russian Export Blend, the Russian benchmark crude, is a mixture of several crude grades used domestically or sent for export. Russian Export Blend is a medium, sour crude oil with an API gravity of approximately 32 and a sulfur content of approximately 1.2%. Its spot price is reported at Augusta, Italy, and Rotterdam, the Netherlands, which act as the two primary delivery points.

Light, sweet crude is more expensive than heavier, sourer crude because it requires less processing and produces a slate of products with a greater percentage of value-added products, such as gasoline, diesel, and aviation fuel. Heavier, sourer crude typically sells at a discount to lighter, sweeter grades because it produces a greater percentage of lower value-added products with simple distillation and requires additional processing to produce lighter products
 
Source: International Marine Consultancy
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Thursday, February 3, 2011
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  • 3:38 PM
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We have noticed with regret the unlimited sales purchase agreements all over the internet that are being released by criminals in the Nigerian society claiming to have non existent ship loads of crude oil. If you do not know what is happening I will tell you now.

Nigeria produces 2 million barrels of crude oil daily according to OPEC figures. That’s 60 million barrels a month. Under joint partnership with the JV partners Shell, Chevron, Texaco, Exxonmobil and others. Roughly 40% of this crude is given to the Nigerian government to sell. The rest is sold by the JV partners to their partners abroad.

40% of 2,000,000 is 800,000 barrels a day.
Multiply this by 30 days and you get 24 million barrels a month that the government has to sell. This 24 million barrels are given to cronies of the Yar Adua administration or governments of other countries. The cronies are those who have helped him in his political campaign or in running the government. They are given these allocations by only one body in Nigeria and that’s the Crude Oil Marketing Department of the NNPC. If you are given an allocation you are subsequently given a letter from this body
The question to ask now is how come Nigeria produces 2 million barrels a day and there are Sales Purchase Agreements for over 100 million barrels of crude oil per day all over the internet. I will reveal the secret to you now. 99% of these Sales Purchase agreements are all fake. The peddlers of these agreements are only looking for one thing from international buyers and that thing is a Letter of credit covering 2 million barrels of crude oil which is roughly 140 million dollars.

If a buyer issues a letter of credit for 140 million dollars to any Nigerian, he must first have the money in his account abroad before his bankers will agree to issue this letter. Once he issues this letter, his funds are trapped in that account until the transaction is completed or cancelled.

The Letter of credit is issued to the sellers bank in Nigeria. It can only be cancelled with permission of the sellers bank and the consent of the seller. If the buyer wants to cancel this transaction, he has to travel to Nigeria and find both the seller and his bankers. Without this he cannot cancel his Letter of credit. His funds are tied in his account abroad based on the LC he approved.

Now here is the deal which the so called sellers use to make their money. When the buyer finally finds the seller and his bankers in Nigeria, the seller will not give his consent for the Letter of credit to be cancelled since he has or he claims he has already paid millions to lift the crude oil and has been working on it for months. They now force the buyer to pay a damages fee of at least $200,000 or $100,000 before he can be allowed to cancel the letter of credit. This is why these so called sellers are incapable of putting a 2% performance bond down even after months of signing the contract and they always seek to remove this from the contract and prefer so called tanker to tanker transfers and not CIF transactions.

This money is very big for any Nigerian and they get away with it because to the buyer, 100,000 dollars or 200,000 dollars is easier to give away than a complete loss of 140 million dollars tied up in a bank in the USA or Europe which is normally on credit from the bank and is running interests. He needs his money free and clear from his bankers but cant get it. So he succumbs to this cheap blackmail just to cancel his Letter of credit and get his bulk money abroad. He leaves Nigeria very bitter with a vow never to do any business with any Nigerian again.

This is why I have always told you all that if they cant show their letter of allocation from NNPC crude oil marketing department, they have no crude. So stop listening to all the NAPIMS and BONNY terminal letters. They have no crude oil. Even if 100 agents sign it for commissions, they have no crude oil. They are only using desperate ignorant Nigerians who call themselves agents but dont know the business to make money at the back. There is no money coming to you as an agent if you are in a transaction that you have not seen the letter of allocation from NNPC crude oil marketing department.

Even if they add so called off Opec quotas and proof of products that you can get from anywhere, they have no crude oil. The simple thing you need to know if someone has crude oil is a letter of allocation from NNPC Crude Oil marketing department. Thats all you need and thats all you should require from any seller who says he has crude oil.

If you do not do this, they will only waste your time on a non existent 2 million barrels and give you long nights of sleeplessness hoping for a commission that does not exist. You do all the work as an agent and then they corner the buyer in Nigeria, collect a litlle big money at the back and dump you without even thinking twice about all your effort.

That’s why I say, don’t get yourself in fraud that you know nothing of because of greed.

If they cannot show you their allocation letter.

If you are dealing with a seller and he cannot show you his allocation letter from NNPC crude oil marketing department and no other agency, he has no crude. Bonny terminal does not give allocation letters. Its job is to supply people with crude oil on presentation of their allocation letters from NNPC crude oil marketing department and no other department of the NNPC handles this.

Claims of contacts in bonny with the head of bonny terminal Mr Fubara are all lies. Don’t let Nigerian fake sellers waste your precious time. Insist for a proof of allocation from NNPC crude oil marketing department. No other agency in Nigeria can give allocation except this office. Napims/Bonny terminal etc letters are all fake. Insist on a genuine letter from NNPC Crude Oil Marketing Department.

Article by Chime Joseph
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Tuesday, November 16, 2010
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Black gold has been known to mean more than one thing depending on your understanding and perception. Black gold to some people might mean coffee; while to some others it could mean something else. Black gold in this context refers to crude oil. Crude oil is the base of all petroleum products i.e. diesel also known as AGO ( Automated Gas Oil), fuel also known as premium motor spirit, kerosene also known as DPK, butane also known as cooking gas. All these products are extracted from the centrifugation of the black gold.

Petroleum products are required in large quantities on a daily basis owing to the fact that there are trillions of car owners worldwide; these car owners require the assistance of black gold products to keep their vehicles running. You would also observe that there are industries worldwide that utilize power generating sets to enhance production performance. These power generating set also require petroleum products to successfully ignite their engines. The use of black gold products is imperative to every society and hence the need for countries to seek this product.

The black gold gives you an opportunity as an individual or a company to earn a recurring income as a middleman. You do not need any financial commitment in order to tap into this source of income. All you need is knowledge of how the business runs your mobile phone and internet. To be at the top of your game in this business, it is imperative that you understand all the trading terms. Don’t be nervous! One step at a time and you will get there. It is not rocket science, people are doing it and so can you. You can make as much as you want to; it all depends on you.

The black gold is making people rich working from the comfort of their homes. In most cases, there is no physical contact between the parties involved. It is advisable to schedule a conference call most times so as to communicate with all parties. If you happen to be in the same country, you can meet physically for once and then every other correspondence can be via email, skype or phone call. This is how you make money from black gold.

1. Have an indebt knowledge of how the black gold business works

2. Contact a genuine seller

3. Get procedures from seller

4. Contact a genuine buyer

5. Send seller procedure to buyer

6. After buyer agrees negotiate your commission

7. Send SPA( Sales and Purchase Agreement) to buyer

8. Buyer signs and returns

9. Follow the rest of the procedure

10. Pays for product and commission to the agents

The above listed is a brief outline of the steps involved in earning black gold income. If you can achieve these then you are on your way to earning a recurring income. Please remember that you cannot sell a product you are not conversant with. The first step should not be neglected. I have taken my time to write a manual that would help you understand the basics of this business. It is hosted on lulu.

You can check it out by going to www.lulu.com/spotlight/victordominic





































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Saturday, September 25, 2010
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Crude Oil business has the potential of making a recurring income for you if you play your card well. As a facilitator in this Business, you stand a chance of generating $50,000 - $200,000 as sales commission.

Facilitators are termed the 'husslers' of this business because they do the sourcing of both buyers and sellers in most cases. A facilitator in crude oil business is a mediator between buyer and seller of crude oil commodity. A facilitator could either be an individual or a company as the case may be, he is paid after the transaction has been sealed. The earning potential of the facilitator can be huge depending on the negotiation during the process. Below is a low down of how much a crude oil facilitator can earn:

Assumption is that the minimum quantity being purchased is 2 million barrels:

For a commission of $0.05

$0.05 * 2,000,000 = $100,000

$0.10 * 2,000,000 = $200,000

$0.20 * 2,000,000 = $400,000

$0.30 * 2,000,000 = $600,000

$0.40 * 2,000,000 = $800,000

$0.50 * 2,000,000 = $1,000,000

These figures may vary depending on negotiations. Though being a facilitator in crude oil business could be very frustrating when things are not going on as planned but it takes persistence and consistence to seal a transaction in Crude Oil Business.
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Friday, September 24, 2010
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Crude oil is becoming hard to find and getting a genuine supplier is even much more harder. With the crude oil business being one of the world's largest and easily one of the most profitable, there are a whole host of companies and agents in the fray posing as sellers of this black substance. That said, there are various other factors at play, which determine the extent to which companies or agents can go to be in the supply business.
Firstly, there are several kinds of crude oil ranging from: Brent crude, Bonny Light, Forcados Crude, Saudi Light Crude, etc. The specification of these products are relatively different and their demand and prices also varies. Amongst these crude oil, the one in higher demand is the bonny light crude oil which is said to have a higher API gravity (low specific gravity) and it is mostly produced in the Niger Delta basin of Nigeria. The very low sulfur content of Bonny Light crude makes it a highly desired grade for its low corrosiveness to refinery infrastructure and the lower environmental impact of its byproducts in refinery effluent. However, a few countries have been said to have this crude oil in abundance, these countries are Nigeria, Russia, Saudi Arabia, Kuwait, Iran, USA, etc. Some of these countries have a very large demand in their own country so buying from them might pose some difficulty. Nigeria is still known to be the most flexible country with regards to buying crude oil if you are fortunate to find into genuine sellers.
Finding a verifiable seller in the Nigerian market is very simple if you follow the steps. Firstly, you must decide on whom to buy from since there are several sellers in the Nigerian market. If you choose to buy from the government that means you'll be dealing with the Nigerian National Petroleum Corporation (NNPC). Buying from this corporation is safe but you'll be faced with a whole lot of challenges like meeting up with their policies which are extremely strict. You could also choose to buy from private sellers like Shell, AP and Chevron, but buying from independent sellers that already have bulk allocation from the Nigerian National Petroleum Corporation is usually the best.
Having said, the big question now is how to get this verifiable sellers?. Although, in the parallel market of Oil industry it is the buyer who always should come clean first and disclose its profile, want and ability and should also be willing to provide documents and most importantly exercise cautious. There is a lot of fake sellers out there, and quite simply - the watchword is due-diligence. Without wishing to appear disaparaging, anyone who enters such markets without an in-depth knowledge of the dynamics and mechanics of the market itself, with no experience, is asking for trouble. Due diligence is the only sure way of making sure - how well do you really know this counterparty? In a Due Diligence you need to know if the "seller" is a duly registered company expecially in some countries but dealing locally, or having someone to correspond with the sellers in the country you are buying the product from is very important.
Furthermore, you should be careful about sellers claiming they are able to supply extremely large quantity of crude oil as most of the independent oil sellers have a limited amount they can supply per month. Another note is that there is no fix pricing of crude oil, I have seen many so called sellers advertising selling crude oil at fix pricing or claiming they can supply at a certain too-good-to be true prices. You should be wary of such people and no genuine seller requires you to commit any amount of money prior to completion of the deal or will require you to pay any upfront whatsoever!
(ArticlesBase SC #3247993)

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Friday, July 23, 2010
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The Oil and Gas business is no doubt one of the biggest money generating business in the whole world. I am sure you are aware of the fact that daily consumption of fuel products is increasing and days go by and as such there is a huge demand of oil products all over the world. The Oil and Gas sector presents an avenue for both investors and marketers to  make huge sums of money on a daily or monthly basis. There are certain terms associated with this business; it is imperative at this point that you have an understanding of these Oil and gas terms.


1. SPA- Sales and Purchase Agreement

The SPA serves as a legal document which is presented by the seller of a supposed crude oil commodity through the seller’s agent to the buyer or his or her agent or mandate for the buyer to sign, seal and return back to the seller. It is a legal document binding on both parties once signed and incurs a penalty if one party defaults in fulfilling his side of the purchase contract. Most likely it has the terms agreed by both seller and buyer present in it. A copy of this document is given to the banks of both parties as the deal proceeds while copies are also kept for security reasons. Since the SPA is a legal document, care should be taken before it is signed since many people defraud others with it. It is often times presented in soft copy and is printed out and filled by the other party.

Scams Associated with SPA

It is a well known fact that people tend to perpetuate fraud through legitimate means of making money; especially when it is internet related and hence reducing trust and making it difficult to seal a deal in this industry. Buyers must be very careful with the issue of signing of an SPA. Once an agreement is reached by some parties and the SPA has been duly signed, some fraudsters fault the agreement deliberately and demand a penalty fee of $100,000 or more from the buyer thus forcing the buyer to pay for a deal that never occurred; this is usual with many desperate facilitators and agents so be careful when you enter any deal because there are so many scammers on the prowl.


2. POP- Proof of Product

This document serves as a clear indication that the owner of the oil commodity has a true possession of the product. This document must also indicate that the seller has the commodity for sale as at the time of transaction. This document can be issued in hard copy but it is mostly delivered through electronic means (email). The buyer should make it a point of duty to carry out his due diligence by confirming the product before proceeding on any transaction with the seller.

If you are ever going to strike it big in the Nigerian Crude Oil and gas industry, you must focus on getting a genuine deal. The only requirement for a genuine deal is a letter of allocation from NNPC Crude Oil Marketing Department. The seller should be able to provide this to show the buyer he has a product up for sale.
Fraud in the oil and gas business is not only committed by Nigerians, it is committed by people all over the world. Insist on a proof of allocation in the form of a letter of allocation from the relevant government ministry or agency in charge of petroleum in any country. Failure to do this will only waste your time and money and you will be working for international fraudsters unknowingly.

Once you have a genuine copy, it is always easy to confirm but the trick is to make sure the letter is from a genuine agency with the authority to allocate crude oil or its by products. For Nigeria, only one agency has this power and it’s the NNPC crude oil marketing department. This is done in likewise manner in every country of the world to ensure that the process of lifting crude oil globally is never complicated and never inspires or motivates fraud in any way.

3. LOI- Letter of Intent

The LOI is a legal document that is issued by the buyer of an oil commodity. This documents indicates the buyers interest, it also specifies the specification and conditions upon which the buyer would love to transact the business.

Many a time, buyers issue LOI only to find out that the seller or his agent is not genuine or does not have the supposed product at hand. A lot of hungry facilitators do this when they are still struggling to get a supplier. They commit the buyer only to start hustling for a seller. Also note that the L.O.I has an expiry date but it can be re-issued.
4. Proof of Fund

a. Letter of Credit

b. MT 799

c. Bank Guarantee

d. MT 103

Proof of fund is a financial instrument that indicates to the seller that the buyer of the crude commodity is capable of buying the product. It shows that the buyer is financially capable to handle transactions of such huge magnitude. It is usually issued by the buyer’s bank, if the buyer is credible enough, his Bank should not be hesitant to issue this to the seller.


5. Facilitator

A facilitator in the oil and gas field is more or less like a middleman in the world of commerce. A facilitator is someone who searches for both buyers and sellers of an oil commodity; he in many cases look for agents to companies or individuals who need a particular oil product available for sale. A facilitator spends both time and money trying to get both genuine and serious buyers and sellers. A facilitator serves as a link between the buyer and the seller, every document for initiating a deal goes through him and he forwards to appropriate party involved. The work of a facilitator is very stressful and sometimes discouraging when he comes in contact with unserious persons, sometimes the chain of facilitators and agents to a deal make everything tiring. The success key for a facilitator is patience and persistence. The fee of a facilitator is much lower than that of an agent but it is something compared to the effort. A facilitator could earn up to 50 cents per barrel depending on the chain of people involved. So his pay is dependent on the number of barrels the buyer is willing to buy. If the buyer wants 2 million barrels of crude, multiply 50 cents by 2 million, you can do the mathematics and get the figure. In a case whereby a facilitator is dealing with another facilitator, they come to an agreement on how to share the 50 cent. What stops most facilitators from brokering a deal is greed. Everybody wants to make it big at the first strike, they forget that they would have more deals to broker. Most times a deal never pulls through because of this, but if they have understanding, things would just flow well.

6. Mandate

A mandate could be likened to the spokesman of the seller in most cases. The seller gives him authority to act on his behalf. He gets more commission than the facilitator; say $1 in most cases.


These are some of the few terms you should know in the Oil and Gas industry. More of these terms would be posted later.


7. TTO (Tanker Take Over):  In oil and gas business there are various processes for procurement of commodity. TTO is one of those processes; as the name implies the buyer in this case would take over the vessel which contains the product; after his supercargo and inspectors come onboard, confirm product and do the Q & Q. This vessel would have to be chartered from vessel handlers; sometimes the seller pays for the vessel and after the buyer has confirmed product, he pays for total cost of product including charter fee. Most TTO deals do not take time to seal if the right things are in place.

8. TTT (Tanker to Tanker Transshipment): Unlike TTO, TTT requires that the buyer has his own vessel which would be utilized in loading the products which have already been loaded on a vessel. The buyer sends the Q88, ATL (Authority to Load) and CPA to the seller and the seller sends a NOR (Notification of Readiness) to the buyer vessel.  TTT deals also do not take time to seal.

9. CIF (Cost Insured Freight): This process is usually backed up by an insurance cover. The seller bears the whole cost of loading the vessel and moving the products down to the port of discharge of the buyer; the buyer then conducts  Q & Q and then pays for the product upon successful report. The seller in this case needs to be sure that the buyer can perform by requesting for a proof of funds.

10. FOB (Freight on Board): This is similar to the CIF but different in the sense that there is no insurance cover attached to it.

The above listed are some of the terms that are utilized in transacting crude oil business, you should learn to familiarize yourself with these oil and gas terms. 

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