SELLERS/BUYER FOR CRUDE OIL

No seller intentionally loads a 2million barrels vessel without being sure of the buyer and sale to overseas to look for who will buy? There are unimaginable risk involved.

As brokers, we must face reality and STOP chasing shadows which we at iRichie call “SHADOW CARGOS”. We have the means to make sure there is nothing that can go wrong. We have a proven track record of success and well connected to genuine sellers. Also, because we have had the success we can simplify further. Some of this comes from huge experience, and this is why it is important to have a really good connection and knowledge of the business you do.

We have convinced the NNPC/JCV partner at the Bonny Terminal that we could go ahead with just a payment guarantee which is bank instrument and then deliver and then the buyer would pay. Not every seller can do this. Why? Because their contacts and connections are not strong and good enough to facilitate good positive result. We are on top of things and make things happen as far as Nigeria Crude Oil Trading is a concern.

But hear me say this now, despite our contacts, experience and top connections, This process would NOT work for very long if the mandates or agents keep on introducing fake and incompetent buyers that could not pay.
In the process of our due diligence with our sellers, we have found out that a particular seller could deliver and had done so 12 times, but without having a single buyer pay. Obviously, they were doing something very wrong costing them millions of dollars.

Now when buyers come in the door they want to take the easy path to have success, without minding how favorable it will go with the other party (the reseller). However, there are still holdouts from those that do not trust and put up barriers that make it hard for a seller. A typical barrier is a demand for an upfront performance bond, even with DLC/BCL which is not the active instrument. It is like saying to a seller, “We do not trust you to deliver.” And then the buyer’s bank has to make it hard on the seller. And the harder it becomes, the harder it will ever remain for such a buyer to close a deal.

And if the seller procedure is complicated, then the more something may go wrong somewhere in the deal. By doing so, you really do not want your banks to help you close a deal. It is completely possible to walk a real seller and a real buyer into a procedure that will NEVER close. And it is also possible to close the deal with straight forward procedures with the clear understanding of such procedures. But when you keep on creating barriers in form of purchase security which is out of the sales and purchase terms, then you can never know that it will not close until it is too late. So if you can keep it simple the lack of knowledge and experience by anybody involved has a much harder time to get in the way.

We respect the human factor in oil transactions, but same time we do not expect the contract to somehow close the deal itself. Both parties involved in Crude Oil transactions (reseller/intermediary/Agents and end-buyer) “MUST” put in their efforts to push past the problems by keeping the focus on the end result while dealing with the challenges with a “POSITIVE MINDSET”.

One of the ways we challenge the statuesque is by discovering where the impediments to a transaction are and then change the situation to provide an elegant and simple solution to the problem. We really try hard to give advice that will benefit people in crude oil trading business.