Magister Operis · Commodity Knowledgebase

Petroleum — BLCO & Allocation Holders

What a serious crude buyer actually requires — and why most offers fail.

Bonny Light Crude Oil (BLCO)

 

Magister Operis' inbox contains numerous offers for BLCO and documents in NNPC letterhead. Magister Operis is absolutely direct to a buyer for crude oil but that highly experienced buyer says that "Bonny Light Crude Oil is a complete waste of time" as well as says he will not do direct nor indirect business with the country of Nigeria.

Magister Operis' buyer will only buy contracts and not spot offers. So just because there is crude loaded on a ship(s)... that is not enough to stimulate the interest of the buyer. The seller must be in the position to evidence his/her ability to deliver crude on a predictable manner...month after month for at least a term of 12 months.

That said... Magister Operis would still offer BLCO to the buyer IF (and only when) the seller can prove/evidence the following to Magister Operis: 

  1. The seller is a real, legitimate, experienced, and legal business entity.
  2. The seller can evidence an actual working relationship/dialog with NNPC rather than just showing typical NNPC letterhead documents that currently litter/pollute the Internet.
  3. The seller can evidence the ability to deliver throughout the duration of a contract rather than just a single shipment or set of ships.
  4. All parties in the middle are on the same page and professionally packaged for easy commission payments.

 

IF THE ABOVE FOUR CONDITIONS CANNOT BE MET...

PLEASE DON'T FURTHER WASTE YOUR TIME NOR MAGISTER OPERIS' TIME WITH THE OFFER!

 

Allocation Holders

The same discipline applies to petroleum allocation holders. An allocation holder is usually not a title holder — however firmly they insist otherwise. To sell real refined product, someone in the chain must hold title to it. An allocation holder may not own the product but may be able to deliver it; if so, the burden is on the allocation holder to prove their supplier is real, ready, and able before asking the buyer to prove anything. Parties who do not pay the people required to secure an allocation contract often never receive a drop.

Every engagement is governed by the firm's Method and Disclaimer; intermediaries should also review Broker 101 and the firm's Due Diligence standards.