• Personal
  • Corporate


01 Oct 2016

Fraud in Petroleum Trade Deals: The Loaded Vessel of BLCO Scheme in Overseas Oil Trading



Added the most simple and many unambiguous of terms, in neuro-scientific alleged intercontinental “secondary” marketplace petroleum trade today, there’s ONE central FACT that has become virtually conclusively set up among most specialists and respectable dealers alike — and that is, that today the area is infamously infested with widespread and pervasive con, fraudulence and fraudsters. And, in addition, that nowadays and marketplace weather, if you should be a GENUINE oil or petroleum items purchaser selecting an equally genuine seller of product, it offers become more and more hard, if you don’t almost impossible, locate one, and vice versa. Most regrettably, i need to send that that summary is just one which I have actually painfully lengthy come to, based not just on the basic consensus among respected specialists and dealers alike, but on my own considerable research, researches and writings on the go.


Within author’s considered view and evaluation, one of several significant ways in which perpetrators of such fraudulence within the intercontinental petroleum trade discounts try to carry it completely today, is by packaging and providing these types of provides as involving an already filled vessel of BLCO crude or any other oil items. We’re going to merely call-it: the Loaded Oil Vessel of BLCO Scheme in Overseas Oil Trading. At the least, a sales provide presented as a loaded oil vessel provide should immediately purge a critical red flag and alarm for care to its receiver, the offer is, at the best, quite debateable on its legitimacy, plus most likely and most probably is a FAKE and a scammy offer.

What’s the basic nature for this scheme? Just reported, the claim by Internet dealers whom peddle these types of provides, is the fact that product (crude oil or some processed petroleum product) was already “loaded” in a vessel that is positioned at a designated place within the intercontinental waters and is ready and waiting around for immediate transshipment (usually on a TTO arrangement) toward purchaser whom comes ready to buy it.

(As an accredited Mandate of a number of major crude purchasers found both in america and Europe, this writer actually cannot count the number of times each week that people obtain these types of provides at our consultancy workplace mail cardboard boxes and on occasion even via telephone calls — provides from persons whom declare that these are typically a crude oil “seller,” “mandate,” or any other intermediary, and they have some 2 million, often around 4 million, drums of BLCO or FLCO accessible to offer, every month, and all from it currently “loaded” on a vessel within the intercontinental waters).


An average provide of such kind, which plainly defines the type for this fraudulence in petroleum trade discounts, could be the one that had been recently received at author’s consultancy workplace from a supposed dealer whom stated having an “already LOADED VESSEL for Bonny Light Crude Oil (BLCO),” and pledged that “we are able to do at any amount demanded.” THE PROVIDE READS BELOW:


1. Buyer and Seller sign and seal Contract including banking coordinates and exchange the finalized copy by email. The electric finalized copy by both Parties is recognized as legally binding and enforceable and MUST not be changed. The executed salon is lodged within their respective financial institutions.
2. Seller’s captain issues marine ATB to buyer’s nominated inspectors and super cargo and takes supercargo on board loaded vessel for product confirmation.
3. Buyer problems Payment of Forty MILLION NAIRA (N40,000,000.00) in preference of seller for logistics upon product verification.
4. Seller confirms Payment then clears and moves the vessel to Cotonou waters for Q and Q evaluation.
5. Buyer’s Inspectors carry on board the loaded vessel in Cotonou intercontinental waters the conduct of high quality and amount inspections (at purchaser’s expense).
6. Q and Q report released toward purchaser and seller’s nominated bank as stipulated within the contract and purchaser locations voyage re-charter on the vessel.
7. Buyer problems Letter of Credit (LC) for the whole cargo and agents’ commission.
8. Last repayment is effected with Operative Letter of Credit or Swift KTT Wire Transfer of 100percent repayment for cargo to seller and commissions to all intermediaries nominated bank records (as specified within the salon) simultaneously against agreed delivery and cargo documents submitted because of the seller through his bank

TRANSLATION: basically, what this provide claims is:

== the vendor will probably pay for and charter an oil tanker ship,
== he will load it because of the product (inside specific situation, the Nigerian BLCO crude oil), and transfer the cargo to a designated location on the intercontinental waters just from the Nigerian shore,
== and also at that place owner’s captain will issue a marine ATB (Authority to Board) toward purchaser’s nominated inspectors and very cargo to invite all of them in to the loaded vessel to ensure toward purchaser the vessel is “pregnant” because of the loaded cargo.
== And, in this case, with a payment because of the purchaser of Forty MILLION NIGERIAN NAIRA (N40,000,000.00) [appx. $280,000 in USD] toward seller “for logistics,” owner after that moves the filled vessel further toward Cotonou waters for Q and Q inspections to be undertaken to ensure the particular amount and top-notch the cargo which is aboard the vessel toward purchaser.
== Thereupon the buyer places a voyage charter on the vessel (i.e., it re-charters the pregnant vessel from the vessel Owners/Handlers), and issues the Letter of Credit (LC) in payment for the value of the entire cargo confirmed by the Q and Q.


Already filled vessel of BLCO systems like the one outlined above, and others want it, are generally riddled, however, with many really serious working and useful company dilemmas which will make these types of systems challenging, virtually impracticable, susceptible to, and ready-made for scamming and fraudulence.

FOR ONE THING, NO LEGITIMATE SELLERS WOULD COMMONLY REALLY PROVIDE THESE A DEAL. As an useful matter, it’ll be hard, if you don’t impossible, locate even one seller within the entire Nigeria crude marketplace, if he’s a LEGITIMATE provider that paid for and legitimately acquired product through the NNPC, that can make a TTO purchase of his product under these types of procedures. Why? Because attempting to sell crude under these types of TTO terms strongly suggests that, for some reason, a seller of BLCO crude would send, or shall have submitted, to attempting to sell his crude product under the following attempting to sell conditions that will be considered rather a tremendously hard, non-prudent, even impossible, and irregular set of attempting to sell circumstances regarding seller of product anywhere in the world:

== The seller shall have (presumably) paid for the merchandise, the NNPC-owned or managed Nigerian oil (BLCO), together with a vessel filled fully because of the product on a Nigerian delivery terminal,
== He shall went forward and hired and paid for a staff of highly-paid automobile operators to navigate this loaded vessel through
== the ship operators shall have navigated this vessel through all the strict security apparatus and protocols associated with the Nigerian interface, and to have sailed the vessel through Nigerian loading terminal and harbor (evidently after having made a pre-payment not just the crude, but also for the administrative as well as logistical prices which can be usually taking part in these types of businesses, all of which usually involve very huge amounts of money),
== and ‘loaded’ ship shall have now been moved off to the designated location on the intercontinental waters where they are going to encounter some not known interested “buyer” to transact the purchase associated with the cargo.

As an useful matter, however, the truth associated with the matter would make the possibility associated with the above situation occurring virtually definitely impracticable, unreal, economically imprudent regarding seller, and incredibly not likely. Like, unlike what the aforementioned TTO attempting to sell situation strongly implies or implies, the simple fact associated with the matter is the truth is the strictly enforced policy and practice associated with the NNPC is it will not accept of or allow any vessel to be filled on its Nigerian loading terminals — and also this same policy, incidentally, could be the basic NNPC policy that pertains, equally well, in most other style of deal (CIF or FOB) — UNLESS the purchasing celebration shall have first placed a verified banking repayment instrument who has a “blocked funds” provision with it where the crude shall have now been completely paid for.

Consequently, for a Nigerian re-seller associated with the Nigerian BLCO (or any other brands of its oil) to obtain any cargo through the NNPC and to transfer it out associated with the Nigerian harbor, you may be sure that he shall have expended humongous amounts of money, as well as attempts, to do this. And thus, it might be practically impossible that you’d discover these types of a re-seller associated with the BLCO crude, presuming he’s a LEGITIMATE re-seller whom legitimately got his product, agreeing to market his crude under these types of procedures since the above in a TTO offer. Leading anyone to believe this might just perhaps occur where and when there’s some fraudulence in petroleum trade offer.

In deed, this really is one major reason Nigerian BLCO oil discounts, generally speaking, but the majority particularly any which can be packed and marketed as alleged “TTO” or “TTT” discounts, can be often viewed within reputable dealers’ groups, to be of debateable substance and are usually regularly associated with suspicion and doubt regarding the fundamental legitimacy associated with the supply of the merchandise, or associated with the provider. Essentially, these types of bad view of such deals arises out from the undeniable fact that the premise and implication which underlie these types of a deal basically goes against all odds and basic general concepts and accepted norms of trading, and resistant to the normal and usual ways in which all BLCO purchase deals are often known to be made out of the NNPC. Just reported, the idea right here — that is the one that straight away seems patently impractical and also naïve, even the Nigerian company environment which is often seen as corrupt — is any seller after all associated with the Nigerian BLCO crude — a product that is, besides anything else, the advanced oil towards the top associated with the variety of the entire world’s many prized brand of crude plus one which is very popular by oil dealers throughout the world — will probably buy, elaborately arrange for, and load, a BLCO vessel all with his very own money, with prices working within the a number of billions of bucks, then place that loaded cargo of oil in intercontinental waters waiting around for a supposed “buyer” to out of the blue arrive purchase it from him.

Definitely many, many implausible and most improbable, as you would expect!


In deed, one known industry fact regarding both of these hybrids of discounts (the TTO & TTT), is many reputable and genuine dealers of Nigerian crude oil would usually shy from these types of discounts, preferring to accomplish an FOB or CIF offer, in stead, as his or her most useful choices, as they see those to be an even more simple and less dangerous or higher reliable approach to deal as compared to TTO or TTT deal. Additionally, actually, some experts took to characterizing the TTO and TTT offer — which, incidentally, is a style of oil deal that is somewhat strange with just the Nigerian oil marketplace within the world oil marketplace — as discounts or trades in “stolen cargo” of oil. These types of experts describe that, the truth is, at the least theoretically, generally the only way a purchaser can realistically get a TTO cargo is through a so-called “broken oil deal” or “abandoned oil vessel” scenario — that is, a predicament whenever, by some set of conditions, after a buyer shall have tendered his “blocked funds” banking repayment instrument toward NNPC in order to make the best NNPC-sanctioned BLCO acquisition, and shall have experienced the vessel legitimately packed with cargo for him, the repayment will not after that, for whatever reason, process and seller is left sitting with a loaded vessel and no purchaser for this, inducing the “pregnant” vessel (so the thesis goes!) to stay completely from the harbor waiting for someone else, a second purchaser, ahead along and get the cargo through the original purchaser.

In reality, in offering a reason regarding the supply of their particular product, which is exactly the attempting to sell rationale and sales hype that lots of net dealers and their particular intermediaries whom peddle these types of discounts often present, and is how these types of events often promote and present their particular TTO or TTT deals to potential purchasers — correctly it’s an ‘abandoned automobile’ scenario, the usual claim being the crude on sale that is supposedly sitting on the high seas waiting for a purchaser’s bid, have been the item of a loaded vessel oil cargo whose original purchaser which had initially put-up the required banking repayment instrument on the cargo, had for whatever reason dropped short of performing the banking instrument, thus needing a brand new purchaser whom comes along to simply match the original purchaser’s economic responsibility and cargo is his!

And, consequently, considering the evident improbability and dubious and implausible nature of such rationale and explanation since the above offered by peddlers associated with the “abandoned automobile” or “abandoned cargo” discounts in explanation associated with the basic supply of their particular TTO or TTT cargo, experts that are associated with the bad disposition regarding these types of discounts, characterize these types of discounts, generally speaking, as transactions in “taken” cargoes. There was, these types of experts say, no other practical or logical or most likely company way where the peddler of such discounts could usually come across these types of cargo except that to own really taken all of them. Or, except that by these types of discounts being outrightly PHONY discounts merely created on simple fraudulence by their particular peddlers. When you have documents purporting to be alleged “loaded vessel” documents that claim you’re the rightful owner or seller associated with the BLCO cargo aboard the vessel, they state, while paid for and legitimately received the crude through the NNPC, then you definitely wouldn’t normally, and may perhaps not, perhaps accept to market your cargo to purchasers under these types of impractical, implausible, and financially also dangerous set of stipulations since can be found because of the TTO (or TTT) peddlers. And, they state, if, alternatively, by any chance or any set of conditions of whatever sort you are in possession of a TTO cargo that you couldn’t yourself right buy, after that that which you have actually, they state, is nearly truly a FAKE offer supported by fake documents — fundamentally, most likely forged documents copied from the best deal by intercontinental conmen from hijacked vessel that is currently coming to its Port of Destination. A vintage situation of fraudulence in petroleum trade offer!


In point of fact, the target facts associated with the matter offered, strongly militate resistant to the fundamental logic or rationale underlying having an alleged “loaded vessel” offer. Initially, the sheer logistics of crude oil trading and cargo are awfully capital- intensive, and vessels packed with these types of Nigerian BLCO product are only perhaps not left on the high seas waiting for any not known “buyer” ahead along and get it. Subsequently, actually, each vessel within the Nigerian harbors is meticulously taken into account and checked because of the Nigerian interface authorities, and is heavily guarded because of the Nigeria navy and other unique task causes assure and protect from any possible theft or diversion of cargo, and each vessel that is cleared for cargo delivery planning and out from the Nigeria territorial waters, never as its working terminals, is cleared and taken into account not just because of the Nigerian Customs, but nowadays (as of the present strict reforms instituted by a brand new, intense group of newly-appointed Nigerian authorities in 2012) because of the Nigerian EFCC investigative group, the Navy fleet, and other high-level federal government unique task force today in operation to control these types of things in Nigeria. And thirdly, you will find which has no ‘stranded’ loaded vessels of BLCO lying around, and there is very not likely to be one, in Nigeria or from the Nigerian shore bearing Nigerian oil, for if there have been to be these vessel packed with the Nigerian crude – a commodity which, without concern, is just one that is associated with the greatest crude high quality, thus associated with the greatest advanced and greatest demand worldwide oil marketplace today – it can perhaps not last even for a split moment available for this to be rapidly snatched up by anxious refineries and intercontinental oil dealers associated with the greatest class and economic capacity.

Rather toward contrary, the truth is that every single vessel lying in any one of Nigeria’s crude oil export terminal which is packed with oil, is filled for a certain purchaser – a purchaser whom shall have compensated the NNPC authorities entirely the crude. Think about it. Whom inside entire globe — even yet in Nigeria — whom, after all, remains mostly a businessman off to make money on his invested money, would load a vessel of, say, 2 million drums capacity with more than $200 million well worth of oil cargo, and have it sitting on the sea paying some US $ 50, 000 per and each day the vessel is on the sea in extra prices in ship upkeep expenses, only for that businessman to get the vessel toward sea then start shopping around for a buyer associated with the cargo during the high seas? Think about it – although it really is within the good, old Nigeria as well as its classic notoriety!!! The standard tale among its Internet peddlers associated with the loaded vessel of BLCO scheme within the intercontinental oil trading, just does not accumulate, pure and easy!

Davide Papa, a well-respected specialist within the protocols and procedures associated with the contemporary Internet trading in oil and other product items, speaks towards basic fact associated with the quite inherent unconfirmability associated with the “loaded vessel” relates to the genuine Nigeria oil authorities. He asserts that, usually, “you cannot [confirm filled vessel document of Nigeria crude oil],” adding that “these types of recommendations this 1 is out there, are always offered by a fake seller – either you a have an offer right from NNPC or you do not – it’s that facile… The FTN [his dealing company] has seen a huge selection of these types of NNPC provides as you have actually defined – all fakes.”


A recent report released in January 2012 because of the globally recognized ICC Overseas Maritime Bureau (IMB), the anti-crime supply associated with the ICC Commercial Crime Services (CCS) associated with the Overseas Chamber of Commerce, the London-based company that is assigned with combating all types of commercial criminal activity, including fraudulence in intercontinental trade and insurance coverage fraudulence, to economic instrument fraudulence, money laundering, shipping fraudulence and product counterfeiting, reported on the findings of the investigative group on instances of correctly comparable subject-matter since the topic for this article the Bureau’s members regularly regarded it involving vessels belonging to all of them that become caught within the disputes over oil cargoes bought by all of them.

In accordance with a directory of the findings released because of the ICC Commercial Crime Services (CCS), “many cases [that will be the topic associated with the Bureau’s investigations], involve small businesses based in either Nigeria or Ghana and feature low quality documents that IMB analyses quickly proved as fake. The documents purportedly reveal the ownership of cargoes continued board certain vessels and con centres around these spurious documents for sale on to unwitting purchasers, often at huge rebate or even for a hefty advance cost,” whilst it strongly warned its members “over the continuous frauds concerning the deceptive purchase of Nigerian petroleum items.”

Mentioning a recently available situation which it investigated for a German purchaser that has been thought to involve a “much higher quality documentation, including one evidently verifying the Nigerian National Petroleum Company (NNPC) had without a doubt provided the vendor because of the goods,” the IMB’s findings reported as follows, that “also, the facts associated with the cargo did actually match that of a real cargo which had happened. More in depth inspections, however, verified the offer had been nothing but an advance-fee fraudulence.”

The report on the IMB’s findings added, that:

“frequently, the sellers suggest to victims which they contact the vessels themselves and verify the cargo is on board. It is possible, with fairly, minimal work to ensure the cargo that a vessel is holding. Guaranteeing the ownership of such cargo, however, is more challenging.

[The] IMB has seen instances when vessels have now been detained at West African harbors on such basis as false documentation concerning the ownership of cargo. Whilst innocence is quickly shown, there is certainly still an impact over time and resources that could have now been prevented were it perhaps not of these spurious deals.” (Underlining added because of the present writer for focus).

TRANSLATED: In a word, as a general idea, determination associated with the credibility and genuineness of such discounts, particularly its actual or real sellers (proprietors), are fraught with, and susceptible to, significant uncertainties and really serious dangers, and not just is-it often tough to figure out if it is that a vessel is packed with cargo, but, moreover, the larger problem about which there is certainly often a larger offer of difficulty locating the answer for, will be able to figure out whom in fact is the owner of or gets the rightful title to these types of cargo. Or, to place it much more merely one other way, the loaded vessel scheme in intercontinental oil trading is, at the very least, an important predictor of potential fraudulence in petroleum trade offer that ought to continually be really taken into consideration by any purchaser of product.

and therefore the basic message right here? That at the very least, the client of such cargo had better just incredibly beware and cautious and exercise the utmost homework whenever attempting to buy crude in a “loaded oil vessel” scheme, or any TTO or TTT offer!

As Mr. Michael Howlett, the IMB Deputy Director, put it, rather succinctly summing it, “These frauds often rest on the undeniable fact that the target is certainly not well-versed in product trading. A professional oil investor would understand these frauds for what these are typically. However, some one less experienced may be tempted because of the low price and evident credibility associated with the documents.”


A relevant but important concern that logically uses through the above evaluation, is it: given the above rather dreary but bad and objective portrait coated in respect toward realities of such kinds of petroleum discounts, are each and all sorts of discounts involving TTO, TTT or perhaps the alleged loaded vessel deals, immediately bad and ill-advised and really should be immediately denied outright on picture? Actually, NO. Never! In point of fact, quite toward contrary, you will find, and may be, in fact many discounts associated with the TTO, TTT or perhaps the loaded vessel types (or at the least the appropriate versions of these) which can be perfectly genuine and genuine, and are usually being safely transacted everyday today — as a result of the appropriate investor trained, knowledgeable and experienced in carrying out these types of trades. These types of a trader can, and does, upon performing the necessity homework, easily place, identify and choose completely those deals having the proper terms and proper safe procedures to merit being safely transacted.

A trained eye looking for a TRUE or genuine loaded vessel of BLCO kind TTO or TTT offer, knows (or should usually know) precisely what to find, and how and where, to figure out the legitimacy of confirmed deal, or not enough one. In deed, inside author’s consultancy workplace, we’ve mapped completely a certain ready or criteria and markers that people’ve discovered quite accurate as a predictor of a TTO offer who has some merit and a higher possibility of being the best one. This methodology is beyond the range for this article and will not be gone into right here. But, only for merely an idea of it, if a transaction is actually a TRUE loaded vessel deal — what we call a “TRUE loaded vessel” scenario or offer — after that, very merely, what this means is (through the perspective associated with the intending purchaser involved) that a ship shall have been filled, and is today presumably stationed at a spot on the intercontinental waters whilst awaits a buyer. This, in turn, implies a number of other things of good significance and training for people — so, for instance, there requires not be the offer an SPA signing by our purchaser; and considering the fact that, these types of a deal should be expected to be more of a spot kind offer; and, maybe most importantly of all of the for people, which means the seller shall have incurred all the costs associated with the merchandise lifting, the loading, inspection, chartering, etc. Hence, given the above situation, there are certain specific secret documents and proofs the potential purchaser for this loaded cargo should demand and expect you’ll get, and that the cargo’s “seller” (and particularly the supposed Captain associated with the expecting ship) must be easily able (and prepared) to present him. Assuming a talented and experienced crude trade professional versed this kind of things as well as in tanker monitoring methods could undertake an effective and thorough homework work with these types of proofs and documentation (along with a few other specialized company cleverness attempts), you should usually have the ability to figure out whenever what one has in hand is a TRUE loaded vessel situation, thus perhaps the best deal, instead of if it is a fake and non-legitimate one, at the least in many cases.

Remember that a TRUE ‘loaded vessel’ offer, whenever you’re had, could usually be covered up in a matter of 8 hours, or twenty four hours at most, based. Everything depends on whenever documents are received, the time area, and what the vendor has and may credibly show obtained and get VERIFIED.


This article relates to analyzing the realities of fraudulence in petroleum trade discounts, with certain focus on the loaded oil vessel scheme in intercontinental oil trading together significant illustrative exemplory instance of these types of fraudulence — basically the claim advanced level mainly by Internet dealers whom peddle these types of provides, the Nigerian crude oil (BLCO), and in some cases, some processed petroleum items, which they provide, have been completely “loaded” in a vessel positioned at a designated place within the intercontinental waters and are usually ready and waiting around for immediate transshipment (usually on a TTO arrangement) toward purchaser whom comes ready to buy it. We conclude, considering objective analyses and facts associated with the trade pertaining particularly to deals of that sort, the “loaded vessel systems” associated with the types often peddled online, are generally riddled with many really serious working and useful dilemmas which will make these types of systems challenging, virtually impracticable, and susceptible to and ready-made for scamming and fraudulence. In short, as a general idea, determination associated with the credibility and genuineness of such discounts, much more particularly its actual or real sellers (proprietors), are fraught with, and susceptible to, significant uncertainties and really serious dangers, and not just is-it often tough to figure out if it is that a vessel is packed with cargo, but, moreover, the larger problem about which there is certainly often a larger offer of difficulty locating the answer for, will be able to figure out whom in fact is the owner of or gets the rightful title to these types of cargo

And, the central message associated with the article: at the very least, a selling provide presented as a loaded oil vessel provide should immediately purge a critical red flag and alarm for care toward receiver investor the offer is, at the best, quite debateable on its legitimacy, plus most likely and most probably is a FAKE and a scammy offer.

Does which means that that ALL these types of provides are immediately deceptive or fake and really should be prevented and denied outright, just at picture? The final outcome, is emphatically, NO. Never, for you will find, actually, some TTO or TTT discounts of a specific high quality which can be safe and genuine and authentic which carry on being transacted by TRAINED dealers today as we speak, that are knowledgeable and experienced in exactly how and where you should mine for all of them. And, consequently, it really is merely asserted the purchaser of such cargo had better just incredibly beware and cautious and exercise the utmost homework whenever attempting to buy crude in a “loaded oil vessel” scheme in intercontinental oil trading company, or any TTO or TTT kind offer after all!

The report on the findings associated with the IMB cited within the article, succinctly sums it in this way:

“Stringent homework inspections on all events taking part in any major [TTO or loaded vessel kinds of] deal are strongly advised by IMB, even on events with well-known trading documents. Additionally, the Bureau suggests that details of the cargo showing up on the documents are verified individually to prevent losses.”