Nigeria's national oil company, Nigerian National Petroleum Corporation (NNPC), issued letter on 8 September 2015 purporting to permit previously banned oil tankers to now load at Nigerian terminals, though the position is still far from clear.
On 24 July 2015 our Gard Alert provided details of the prohibition by NNPC of 113 named tankers from engaging in crude oil/gas loading activities within Nigerian waters set out in a letter dated 15 July. There was concern and uncertainty as the reason for the ban was not explained and some of the vessels identified had not called at Nigeria for several years.
On 8 September 2015, NNPC stated in a further letter that the President of Nigeria has “approved the consideration of all incoming vessels into the Nigerian waters subject to receipt of [a] Letter of Comfort”. This is a requirement even if the vessel was not previously banned.
This is certainly a positive development, however, the position remains uncertain. There is no express revocation of the earlier ban only that all vessels are now entitled to be considered for loading. After consideration, a vessel may still be rejected for the previous (unknown) reasons.
The letter also states that a review is taking place into whether any tankers have previously engaged in illegal activities within Nigerian waters. It is unclear how that review will be conducted, but if evidence of suspect activity is found while the tanker is in Nigerian waters, the consequences could be very severe, even if the tanker owner is not at fault, e.g. the wrongful act was by a previous owner or the suspicions turn out to be unfounded.
The Letter of Comfort
We have seen a version of a Letter of Comfort which some tanker owners are now being asked to sign. The example we have seen raises some problems:
Some Members have enquired as to insurance cover if they take a commercial decision to sign a Letter of Comfort. Members and clients should bear in mind that insurance complications are likely to arise if liabilities, costs and expenses arise out of “illegal activities”. Also there will often be no cover for liabilities which would not have arisen but for the terms of a contract or indemnity entered into without the approval of the insurer. Since the terms of the Letter of Comfort are so wide, the potential scope of liabilities is difficult to envisage, and insurers are unlikely to wish to expose themselves to such unknown liabilities. The letter of comfort may also give rise to liabilities which, by their very nature, are not insured.
The situation is likely to develop over the coming months, and further information will be provided when available. In the meantime, we recommend tanker Members and clients:
Please direct any questions to your usual Defence cover point of contact.