NNPC APPROVED PROCEDURE FOR BLCO

BONNY LIGHT CRUDE OIL (BLCO) NIGERIA

CLAUSE 1 – SCOPE OF THE CONTRACT

The Seller and the Buyer, with full corporate authority and legal responsibility, and under penalty of perjury, respectively represent and warrant that one party is the lawful owner of the Commodity in quantity and quality as herein specified, and the other party has the full capability to purchase, receive and pay for the sold and delivered Commodity

1.1 COMMODITY/PRODUCT: The Commodity/Product offered for Sale by the Seller in this Contract shall be “Export Grade Bonny Light Crude Oil”. The Product shall meet Bonny Light Crude Oil Blend Product Specification as quoted in the International Market. Please see APPENDIX A for Bonny Light Crude Oil Product Specification details.


1.2 QUANTITY: The Seller has agreed to offer for Sale to the Buyer, Two [2] Million Barrels of Export Grade of Bonny Light Crude Oil on a Monthly period over a period of twelve [12] consecutive months which is one year.


1.3 MODE OF DELIVERY: It is agreed that the Export Grade Bonny Light Crude Oil offered for sale in this Agreement will be supplied and delivered by the Seller to the Buyer on a CIF basis.


1.4 LOADING PORT: The Loading Port for the Product shall be Bonny Terminal or any other Terminal within the Federal Republic of Nigeria that has the capacity to dispense Export Grade Bonny Light Crude Oil.



1.5 DELIVERY PORT: The “Port of Delivery” or “Discharge Port” for the Product in this Contract shall be XXXXXX XXXXXX for the whole entire period of this Agreement which validity is one year



However, if the Buyer chooses to change his/her Delivery Port after one or more deliveries to a different Delivery Port, a two [2] months advance notice is required by the Seller to effect the change. It is agreed that the Seller will adhere strictly to the Price quoted in this agreement if and only if the Delivery Port is within Western Europe. The Seller has a right to ask for additional fee to cover cost of freight if deliver port is moved outside Western Europe.



1.6 FIRST DELIVERY: It is agreed that the first delivery shall be on or before of XXXXXX 30, 2018. The first delivery shall take place within 30 days of signing this contract.



1.7 TRANSACTION CODE: XXXXXXXXXX



1.8 ORIGIN OF PRODUCT: The Origin of the Product shall be the Federal Republic of Nigeria.



1.9 VALIDITY OF THE CONTRACT: This Agreement is valid for twelve [12] consecutive months beginning from XXXXXX 2018 when the first delivery is expected, with possibility of extensions and roll-over.



The commodity shall be available within the period from XXXXXXX 2018 until completion of the contract, if possible equal monthly lots of about 2,000,000 barrels +/-5% (Five percent) more or less at Seller’s option during the whole term of the contract. Please see Appendix B.



CLAUSE 2 - PRICE

2.1 The price shall be determined by the average of the three days around the Bill of Lading Date (one day before, BL date and one day after). The mean quotations as reported by “Platt’s MC Graw-Hill” wire publication under Crude Oil Assessments under the heading: “International $/BBL Brent DTD”.



A Discount of Ten United States Dollar (US$10.00) Gross per Barrel shall be applied to the price to be determined by Clause 2.1 and distributed as stipulated in Clause 2.4.


2.2 If there is no PLATTS quotation on Bill of Lading date, two quotations before, one quotation after the Bill of Lading date will be used for Price calculation, but always three distinctive quotations shall be used.


2.3 The price referred to throughout this agreement shall be paid in United States Dollar (USD or US$).


2.4 Discount Distribution: The breakdown of the US$10.00 Gross per barrel are as follows;


US$5.00 Net per barrel to Buyer, US$1:00 Net per barrel to the Buyer’s Mandate, US$1.50 Net per barrel to the Buyer’s Agent and Facilitators. US$1.00 Net per barrel to the Seller’s Mandate, US$1.00 Net per barrel to The Seller’s Agent and Facilitators and US$0.50 Net per barrel to the Consultant.


2.5 It is agreed that each party mentioned above will nominate only one Bank Account for the purpose of this transaction. Multiple Bank Accounts per Party will not be entertained. For the record and purpose of clarity, the transaction shall have a maximum of eight [8] Bank Accounts and nothing more. However, one other Bank Account may be accommodated from the Buyer of record if the Buyer is acting as a Purchasing Mandate for a Refining Company or Merchant.



Therefore, in the Final Contract, we will have as follows;


SELLER’S SIDE – Bulk Fund for the Cargo and $2.50 Net/Barrel Covering


Seller’s Account - $Date Brent Less $10.00 Net/barrel. [Bulk money for Cargo]


Seller’s Mandate Account - $1.00 Net/barrel.


Seller’s Agents and Facilitators- $1.00 Net/barrel {Same as Seller}.


The Consultant - $0.50 Net Per Barrel.


BUYER’S SIDE - $7.50 Net Per Barrel Covering


Buyer’s Account - $5.00 Net/barrel.


Buyer’s Mandate - $1.00 Net/barrel


Buyer’s Agent and Facilitators - $1.50 Net/barrel.


2.6 To avoid ambiguity, each party in this transaction must clearly define where they belong and their contribution in the value Chain. 100% disclosure is required. No ghost Agent or representative will be entertained. Secondly all correspondence must be communicated through the Consultant providing the platform for this trade.



CLAUSE 3 - PAYMENT


3.1 In United States Dollars [USD or US$] to be assisted by an Irrevocable, Revolving, Unconditional, Divisible, Transferable and Assignable, Cash Backed MT760 Standby Letter of Credit [SBLC] #XXX Format, from a Prime Bank (according to the specified text as per Appendix "D”) in favour of Seller or to Seller nominated Account on record in this contract. Buyer’s MT760 SBLC will be revolving after first monthly instalment supply of Two Million Barrels (2,000,000 bbls) +/- 5% May 15, 2018 Delivery. The final payment shall be done with MT103 or Bank transfer after Cargo has been delivered at the Port of Discharge; EUROPE. Payment is done before discharge after Q and Q inspection.



3.2 MT7760 SBLC to cover the amount in USD corresponding to the total monthly - nominated quantity of 2 million barrels. The MT799 SBLC shall be revolving as a guaranty against future transactions after the conclusion of each supply until the 12 months contract is completed.



3.3 MT760 SBLC may have the clause “Partial Shipment and Delivery of one million barrels” allowed, subject to a minimum volume for each cargo of 1,000,000 bbls -/+ 5% if quantity required is two [2] million barrels and above per month.



3.4 If payment due date falls on a banking holiday, then payment shall be made on or before the nearest preceding business day to the due date. NOTE: The Final Payment for all Crude Oil delivery shall be by Swift Wire Transfer to all Nominated Account. The MT760 SBLC shall remain as revolving Bank Guarantee throughout the validity period of the Contract.


3.5 PERFORMANCE BOND: It is agreed that since this transaction is financed with MT760 SBLC, a 2% Performance Bond will be required.


3.6 INVOCING: It is agreed that an Invoice for the entire Cargo shall be issued by the Seller in favour of the Buyer and submitted to the Buyer directly and through the Consultant for payment within 48 hours after the Q and Q inspection has been completed in the Supply Vessel and the report submitted to the Seller via the Consultant. It is the Buyer’s responsibility to ensure that the Q and Q inspection is conducted within 72 hours after the arrival of the Seller’s Vessel at the Port of Discharge. Invoice shall be issued against the Out-turn inspection Q and Q Report.


3.7 FINAL PAYMENT: The final payment for Cargo and all Commissions shall be made by Swift Wire Transfer to all the nominated accounts stipulated in this contract based on the outcome of the Q and Q Inspection Report and Invoice within 3 banking days after the Invoice has been submitted to the Buyer by the Seller directly and also via the Consultant. It is agreed that Q and Q will only be done in the Supply Vessel [Not in the Buyer’s Storage Tank] and Discharge into the Buyer’s Storage Tank will only be allowed after the Final Payments and Wire Transfers have been done and telex copy of the transfers have been submitted.


3.8 Banking costs shall be for and to the account of each party.



CLAUSE 4 – PROCEDURE.



4.1 Contract Signing: SELLER and BUYER sign Sales and Purchase Agreement [SPA]. The SPA must contain the Full Name and Registered Address of Seller and Buyer, Their respective Legal Advisers and Consultant Names and Addresses, Bank details of all the Parties involved in this transaction; The Seller, The Buyer, The Seller Agent, The Buyer Broker, The Consultant, The Fiduciary and The Facilitators etc.



All parties involved in this transaction are expected to deposit a copy of the Contract with their respective Banks mentioned in this Contract and with their Legal Adviser and Consultants if they have any.


4.2 Proof of Payment Guaranty: It is agreed that within 5 Working days after signing of this Agreement;



4.2.1 The Buyer shall through his Bank or Associates, issue to the Seller Nominated Fiduciary Account an MT799 Pre-Advice readiness and willingness to issue the Cash Backed MT760 SBLC. See Appendix D for verbiage


4.2.2 The Seller Nominated Fiduciary Account shall within 2 Banking days after the receipt and confirmation of the MT799 Pre-Advice mentioned in clause 4.2.1 issue an MT799 Pre-Advice to the Buyer’s Bank in favour of Buyer of its readiness and willingness to receive the MT760 SBLC and to issue a 2% Performance Bond after the receipt and confirmation of the MT760 SBLC. Please Appendix E for verbiage.


4.2.3 The Buyer’s Bank shall within 2 Banking day after receipt and confirmation of the MT799 Pre-Advice mentioned in clause
4.2.2 issue the Cash Backed MT760 SBLC to Seller’s Fiduciary Bank in favour of Seller. Please see Appendix F for verbiage.



4.2.4 The Seller within 4 Banking days after the receipt and confirmation of the Cash Backed MT760 SBLC in clause
4.2.3 issue a 2% Cash Bond or MT760 SBLC to the Buyer. Please see verbiage in Appendix G


4.3 Tanker Vetting and Approval: Upon confirmation of Buyer’s MT760 Cash Backed SBLC, within 15 working days, Seller Shall supply to the Buyer through the Consultant, the details of Tanker/Vessel selected by the Seller for Charter from the Commercial Operator or Owners of the Tanker for the transaction. The Seller shall nominate and charter the Tanker/Vessel in the Buyer’s Name and shall send the details to NNPC Marine Transport Department for Programming and Loading Window Issuance [LAYCAN].

4.4 Vessel Loading: After Vessel nomination and approval, Seller shall program the Vessel to reflect on Terminal Database, Reassigns Allocation in the Name of the Buyer, the Provisional Lifting Right [PLR] in the Buyer’s Name; the PLR document shall consist of the following, The Quantity of Crude Oil to be Lifted, The Cargo Authority Number, Stem Number, Window Number, Name of Nominated Vessel, Laycan Window Time, etc. and shall forward these details to Buyer.

SPECIAL NOTE: It is agreed that Seller shall load the Vessel with NNPC as the Consignor and the Buyer as the Consignee, all shipping document will be in the name of the Buyer.

If NNPC is Consignor on record, the Seller must demonstrate that he has a right to Sell the Product and also the right to receive payment on behalf of NNPC.


4.5 Documentation and Communication: The Seller shall secure Export Clearance Permit and full Cargo documentation in Buyer's Name as Principal Consignee of Cargo, Loaded Vessel Captain shall send Marine NOR to Buyer/Buyer’s Discharge Port/Buyer's Inspectors. Loaded vessel shall sails to Buyer's Discharge Port immediately after sending the Marine NOR.


4.6 Arrival, Q n Q Inspection and Payment Instrument: Upon arrival at the Buyer’s Discharge Port, Captain of the loaded vessel shall announce her presence to the Port/ Naval authority at the Discharge Port, even as the Buyer's Shipping Agent clears in the vessel to come close to between 15-25 Nautical miles off the coast of the country and shall issue Marine ATB to Buyer's Inspectors to come onboard for Q&Q inspection. Q&Q is done at Buyer's expense and the report is released to both parties within 72 hours. Then Buyer's bank places MT103/23.


4.7 Documentation Submission: Seller shall hands-over original hard copies of cargo documents to the Buyer for confirmation and payment after the Q & Q has been completed in the Seller’s supply Vessel and the MT103/23 has been issued against the Cargo Documents; please see Appendix C for list of documents.


4.8 Invoicing and Payment: Seller or Seller’s Bank shall send Final Invoice for payment based on the outcome of the Q and Q Inspection Report, immediately, Buyer’s Bank shall SWIFT total purchase price of the Product and the commissions to all Agents and stakeholders mentioned in this contract.


4.9 Cargo Discharge: After confirmation of payments, the Vessel shall Sail to the Buyer’s preferred discharge tank for cargo discharge.


4.10 Conclusion and Re-run: End of transaction. Another roll-over of the entire transaction following the same procedure.


CLAUSE 5 – PROOF OF PRODUCT FOR MT760 SBLC ISSUANCE ONLY


5.1 It is agreed that one of the following documents will be accepted and considered as a Proof of Product. [a] A Title Holder Certificate, issued by a Government Regulatory Authority showing that the Seller is the Legal Owner of Product Offered for Sale and has express right to Lift, Sell and Export the Crude Oil for Sale; or [b] A confirmable Evidence of previous Performance and Supply of Crude Oil or [c] Issuance of 2% PB after receipt of MT760 SBLC from the Buyer or the Consultant.


5.2 It is also agreed that one of the acceptable Proof of Product mentioned in Clause 5.1, will be made available to the Buyer by the Seller through the Consultant within 2 working days after the signing of this Agreement if the Seller is requesting for an MT760 SBLC.


5.3 It is agreed by both Parties that if Seller has chosen option [c] in Clause 5.1 as a means of demonstrating ability to perform and as the only means of Proof of Product, then this Agreement shall move to Clause 4.3 after Clause 4.1 of the Procedure.


CLAUSE 6 - PERFORMANCE BOND – FOR MT760 SBLC ONLY.


6.1 The Seller has agreed to provide a 2% Performance Bond in favour of the Buyer to guaranty performance.


6.2 The 2% Performance Bond will be against the total value of the MT760 Standby Letter of Credit [SBLC] issue in favour of the Buyer.


6.3 It is agreed that a top-rated Bank will be used in the issuing of the 2% PB and the MT760 SBLC otherwise, the instrument must be confirmed or approved/supported by a top rate Bank that will be a corresponding Bank to the issuing bank.


CLAUSE 7 – VESSEL: GENERAL RULES


7.1 It is agreed that after the receipt and activation of the MT799 Block Funds, the Seller shall forward to the Buyer directly and also via the Consultant, the details of the Vessel selected by the Seller for Charter from the Commercial Operator or Owners of the Tanker for the transaction. The Seller shall nominate and charter the Tanker/Vessel and shall send the details to NNPC Marine Transport Department for Programming and Loading Window Issuance [LAYCAN].


7.2 It is agreed that after the Vessel is loaded, the Seller shall provide to the Buyer directly and also via the Consultant all the documents mentioned in Clauses 4.5 and 4.6.


7.3 It is also agreed that the Seller shall secures Export Clearance Permit and Full Cargo Documentation [See Appendix C] in Buyer's Name as Principal Consignee of Cargo, Loaded Vessel Captain shall send Marine NOR to Buyer/Buyer’s Discharge Port/Buyer's Inspectors. Loaded vessel shall sails to Buyer's Discharge Port immediately after sending the Marine NOR.


7.4 It is also agreed that the Buyer will have authority to communicate directly with the Vessel Master after the Vessel has been loaded and has commenced sailing to the Port of Discharge.


7.5 It is agreed that the Buyer shall provide to the Master of the Vessel via the Consultant the coordinates and details of the Discharge Port, the Full Name and Address of the Buyer’s Shipping Agent at the Discharge Port, the Q and Q Inspection Company, who shall be responsible for receiving the Vessel at the Port of Discharge and conducting the Q and Q Inspection.


7.6 It is agreed that the Master of the Supply Vessel shall communicate with all the Parties mentioned in Clause
7.3 and 7.4 at least 72 hours, 48 hours, 24 hours, 12 hours and 6 hours before arrival at the Discharge Port.


CLAUSE 8 – ARRIVAL AT DISCHARGE PORT


8.1 It is agreed Upon arrival at the Buyer’s Discharge Port, Captain of the loaded vessel shall announce her presence to the Port/ Naval authority at the Discharge Port, even as the Buyer's Shipping Agent clears in the vessel to come close to between 10-15 Nautical miles off the coast of the country and issues Marine ATB to Buyer's Inspectors to come onboard for Q & Q inspection immediately. Q & Q is done at Buyer's expense and the report is released to both Parties via the Consultant within 72 hours. Then Buyer's Bank places MT103/23.


8.2 It is important to mention here that it is already agreed that the Master of the Supply Vessel shall communicate with the all the Parties mentioned in Clause 7.3 and 7.4 at least 72 hours, 48 hours, 24 hours, 12 hours and 6 hours before arrival at the Discharge Port.


8.3 It is also agreed that the Buyer shall be responsible for getting all the clearance documents required for the Vessel to be safely received at the Discharge Port and discharge the cargo. It is also agreed that all cost will be to the Buyer’s account.



CLAUSE 9 - INSPECTION - QUANTITY/QUALITY DETERMINATION


9.1 Quantity and Quality assessments, conducted by an Independent Inspection Company (SGS or INTERTEK), shall be in accordance with methods and procedures usually used in the oil industry practice, and however, at all times, shall strictly comply with the revised ASTM/P International standards and procedures enforced at the date of compliance.


9.2 For converting volumes, from observed to standard temperatures, and volumes to weights, ASTM tables, latest revised edition, have to be used.


9.3 All Q and Q Inspection cost at the Port of Discharge shall be to Buyer’s Account.


9.4 It is also agreed that all Q and Q Inspection at the Discharge Port shall be conducted on board the Vessel before discharge and not Buyer’s Tank Farm or Storage Facility.


9.5 OWNERSHIP TRANSFER: It is agreed that after the Q and Q Inspection and acceptance of the Report, the Buyer shall Issue MT103/23 or effect a Bank Transfer to cover all payment, then shall the Ownership and responsibility of Cargo and the Vessel pass to Buyer.


CLAUSE 10 SANCTIONS (NONE PERFORMANCE)


10.1 Should either party fail to comply with any of their obligations to the other party with respect to the contract, then the suffering party will have the option to declare Non-Performance against the defaulting party.


10.2 Failure by either party to take action against the other, in case of the other party’s non-compliance with obligations or conditions set forth within this contract, it shall not be interpreted as a waiver to take action for a subsequent non - compliance of the same or other obligations or conditions.


10.3 It is agreed that the Consultant can declare a Non-Performance and Non-Compliance and make the defaulting party to pay the penalty even when the Non-defaulting Party refuses to act.