The Federal government has lifted a ban prohibiting 113 tankers from operating in its territorial waters. President Muhammadu Buhari issued a directive allowing the entry of incoming ships
subject to a guarantee that they “will not be utilised for any illegal activity whatsoever”.
But a letter from the state-owned Nigerian National Petroleum Corporation (NNPC) on September 8 circulated among traders and shipbrokers on Thursday stated that the president had undertaken a review of the vessels and their operations.
In July, the president’s office issued the ban with little explanation. But it was widely assumed to be part of the new administration’s pledge to root out corruption and oil theft that has resulted in tens of billions of dollars in revenues failing to make their way into state coffers.
Nigeria is Africa’s biggest oil producer and its energy sector is at the heart of the country’s economy. But the petroleum ministry and NNPC — responsible for managing a sector responsible for 70 per cent of government revenues — have been plagued by financial mismanagement and political interference.
Oil traders and analysts have speculated about Mr Buhari’s motivation for banning the tankers, some of which they say have not entered Nigerian waters.
Although he has sent out the message that he is serious about the corruption crackdown, market participants said at the time Nigeria was mostly hindering itself from getting the best price for its oil.
“He’s trying to get rid of all the crude theft,” said one London-based shipbroker. “How successful he is, we will see.”
“A lot of the shipowners whose vessels were on the list and were keeping their entire fleets out of Nigerian waters are now back in the market again,” he added.
The oil tanker association Intertanko, however, has told those previously banned vessels to avoid Nigeria despite the clearance.
Nigeria, which produces about 2m barrels a day and is a member of the Opec producers’ group, has taken a further financial hit amid a slide in the oil price. Brent crude, the international benchmark, is hovering close to $48 a barrel compared with $115 last June.
The root and branch reform of the country’s oil sector has included the restructuring of NNPC, an overhaul of its management and the audit of the entity’s notoriously shady accounts.
Emmanuel Kachikwu, the former ExxonMobil executive who was appointed as the head of NNPC in August, said last week “we must eradicate oil theft in eight months”.
President Buhari last month cancelled deals for the offshore processing of Nigeria’s crude and the country’s oil-for-fuel swap agreements that have allowed shadowy private parties such as traders and other middlemen to profit illegally.
New deals, vital for bringing in about half of the country’s domestic gasoline demand, have been signed although observers question if these will be any more transparent.
A fraud-ridden import subsidy scheme for gasoline is also under scrutiny as is the country’s long-neglected refining sector.
Despite Nigeria’s ambitions and the sweeping changes to the oil sector, which President Buhari has prioritised since his May inauguration, industry participants are still uncertain about his economic vision. He has still not appointed a cabinet and critics warn of a lack of direction.
His supporters say he is not looking for a quick fix and needs time to analyse the inner workings of dysfunctional ministries and the state entities that he has inherited.