How offshore Lome threatens Nigeria’s petroleum sector

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Given the fact that 65 to 70 per cent of refined petroleum products shipped to the West and Central Africa sub region is destined for Nigeria, then it would seem most unreasonable that most of the ship-to-ship, bunkering and related activities are being carried out offshore Lome, with huge implications for the Nigerian economy.

The factors that contribute to Lome offshore being the preferred destination for offshore oil and gas activities in the West and Central Africa sub region are numerous and they all arise from Nigeria’s failure to adopt international best practices in the sector.

Initially, most of the ship-to-ship operations were carried out offshore Lagos, however, with the unprecedented increase in incidents of piracy in Nigerian territorial waters, the marine industry and the petroleum trading community started to move West and a lot more of the activities were carried out offshore Cotonou.

According to Peter Dougdale, Chief Executive Officer, Veritek Global Solutions, a cargo inspection and survey agency with over 25 years operational experience in the Nigerian and West African markets, the traders were just moving away from the Lagos Anchorage Area to remove themselves from the risk of piracy. A proactive Togolese government, fully appreciating the potential of turning Nigeria’s loss into their gain, decided that they could add more security with their navy; thus in collaboration with a private company, they established a Safe Anchorage Area (SAA) offshore Lome and that has become the area for all the STS operations.

Dougdale also suggested that another factor that has fuelled the petroleum hub developing offshore Lome is the fact that Bills of Lading for imported petroleum products have to be carried out in a foreign country and as such, Nigerian importers needed to carry out their transactions offshore Lome in other to qualify for foreign exchange from the Central Bank of Nigeria (CBN).

He said: “Whenever there is a transfer of custody there is a Bill of Lading and the Bill of Lading has to be carried out in a foreign country and I think that was one of the issues that contributed to increased STS activities offshore Lome, but it basically started with piracy offshore Lagos, driving the trading community further away to Cotonou and eventually, better facilities were made available at Lome.”

This development is an indictment on the entire Nigerian maritime security apparatus, the Nigerian Maritime Administration and Safety Agency (NIMASA) and the federal government for allowing such a pitiable excuse with it attendant capital flight and dearth of expertise to occur.

One is then forced to ask how Togo, a country with less that quarter of Nigeria’s population, technical and professional capacity and naval hardware provide more security and efficient services to woo more international traders to her waters.

This reality greatly belies Nigeria’s toga of being the Giant of Africa among other sobriquets and further explains why the country continuously relapses into rounds of avoidable fuel scarcity.

At the 2017 Oil Trading and Logistics (OTL) Africa Downstream Week, the Director General of NIMASA, Dakuku Peterside said that NIMASA was working hard to establish a SAA to be populated by the trading community. However, its efforts have not yielded the required results though it is collaborating with other agencies to create scenarios that will attract traders back to Lagos.

Lome has become a petroleum hub for West Africa with cargoes going to DR Congo, Angola, Cote D’ivoire and further along. So it is not just about Nigeria, it is about a hub in West Africa which traders now use to distribute products from. It goes without saying that the implications of offshore Lome taking over from Nigeria are unimaginable.

“There are huge implications in terms of vessels involved, fender suppliers, cargo inspection agents, security agents involved, bunkering agents and anyone who supplies services to those facilities. The SAA is a service which has to be paid for and of course that means that the money all the related services generate will come back into Nigeria,” Dougdale told M&P.

He advised Nigerian officials to establish an enabling environment and make it attractive enough for the trading community to return to. He also urged the Nigerian Navy to demonstrate that the piracy situation is under control and the security is there. “Basically offshore Lagos is closer to the Lagos ports so it should be attractive, although Lome is only three or four hours away from offshore Lagos, offshore Lagos is still closer and saves time for Nigerian traders to bring their vessels in. If everything is kept over here, the money generated will be kept in Nigeria,” he concluded.