Comprehensive Due Diligence Report and Standard Operating Procedure for Verifying Bonny Light Crude Oil (BLCO) Sellers from Nigeria

Document Control

Report Title: Comprehensive Due Diligence Report and SOP for BLCO Sellers
Version: 1.0
Effective Date: January 20, 2026
Prepared By: Procurement and Risk Management Team
Approved By: Chief Compliance Officer
Review Frequency: Annually or as needed (e.g., due to regulatory changes)
Distribution: Procurement Department, Legal Team, Finance Team, External Consultants

Executive Summary

This comprehensive report combines a detailed due diligence framework with a standardized operating procedure (SOP) for evaluating sellers offering Bonny Light Crude Oil (BLCO), a high-quality light sweet crude produced in Nigeria’s Niger Delta region. BLCO is primarily exported by the Nigerian National Petroleum Company Limited (NNPCL, formerly NNPC) through official channels. Given the high prevalence of scams in the Nigerian oil trade—such as fraudulent offers involving fake documents, unrealistic discounts, or upfront fees—thorough verification is critical to mitigate risks.

The report provides background on BLCO, common red flags, verification steps, and legitimate procurement methods. It integrates these into a formal SOP for consistent application. Key recommendations emphasize independent verification, engagement of experts, and avoidance of high-risk indicators. This document assumes no specific seller details; tailor it to individual cases. Always consult legal and financial experts for transaction-specific advice. Adhering to this report and SOP ensures transparency, compliance, and protection against fraud, with an estimated due diligence timeline of 2-4 weeks.

Background on BLCO and the Nigerian Oil Market

Product Overview: BLCO is a premium Nigerian crude grade with an API gravity of approximately 32-35 degrees, low sulfur content (around 0.14-0.2%), and is ideal for refining into gasoline and diesel. It is loaded primarily at the Bonny Terminal, operated by Shell on behalf of the NNPCL. Production is managed by joint ventures involving the NNPCL and international oil companies (IOCs) like Shell, ExxonMobil, and TotalEnergies.
Market Context: Nigeria exports about 1.5-2 million barrels per day of crude, with BLCO being a sought-after grade. However, the “secondary” or “off-OPEC” market is rife with intermediaries, leading to a high incidence of fraud. Legitimate sales occur through NNPCL allocations or authorized offtakers, not random brokers. The NNPCL does not use informal middlemen for “special allocations,” which are nonexistent.

Common Scams and Red Flags

The Nigerian oil sector is notorious for advance-fee fraud (often called “419” scams), where scammers pose as sellers to extract upfront payments. Below is a summary of key indicators of potential fraud, based on documented cases:

Red Flag	Description	Why It’s Suspicious
Upfront Payment Demands	Requests for “registration fees,” “anti-fraud deposits,” “commitment fees,” or logistics costs before verification.	Legitimate sellers prove product existence first; scammers use this to extract money without delivery.
Unrealistic Discounts	Offers of BLCO at $5-10+ below market price (e.g., Dated Brent minus excessive margins).	Genuine deals rarely exceed $0.25-0.40 per barrel margins; deep discounts signal fake offers.
“Loaded Vessel” Schemes	Claims of pre-loaded tankers (e.g., TTO/TTT arrangements) ready for immediate transshipment.	Most such offers are fake; true loaded vessels are rare and verifiable only through specialized tracking.
Unverifiable Documents	Scanned/forged papers like Authority to Sell (ATS), Proforma Invoice (PI), or Bill of Lading (B/L) that can’t be cross-checked with NNPCL.	Official documents must be directly verifiable; fakes often involve non-existent allocations.
Briefcase Companies or Unknown Intermediaries	Sellers not registered with NNPCL or lacking a track record, often “politically exposed persons” or Niger Delta elites posing as brokers.	Legitimate sellers are NNPCL-approved; avoid unverified middlemen.
Pressure Tactics	Urgency to sign deals quickly without due diligence, or offers via unsolicited emails/faxes.	Scammers avoid scrutiny; real deals allow time for verification.

Additional scams include fake “special allocations” from NNPCL, fraudulent orders for U.S. products tied to oil deals, or money transfer schemes disguised as oil investments. Statistics indicate losses in the hundreds of millions annually from these frauds.

Purpose of the SOP

This integrated SOP outlines a standardized, step-by-step process for conducting due diligence on BLCO sellers. The objective is to verify legitimacy, mitigate fraud risks, ensure compliance with international trade regulations, and protect the organization from financial losses. It applies to all proposed transactions involving BLCO sellers, including direct suppliers, intermediaries, brokers, or offtakers. This procedure aligns with anti-money laundering (AML) standards, sanctions compliance (e.g., OFAC, EU), and industry best practices.

Scope of the SOP

The SOP covers initial screening through to final approval or rejection. It does not apply to pre-approved NNPCL term contracts but is mandatory for spot deals, secondary market offers, or unsolicited proposals.

Responsibilities

Procurement Manager: Initiates due diligence upon receipt of an offer; coordinates with teams.
Legal/Compliance Officer: Verifies legal documents, screens for sanctions, and reviews contracts.
Finance Analyst: Assesses financial stability and payment terms.
Risk Assessment Specialist: Identifies red flags and conducts operational verifications.
External Consultants (e.g., SGS, Intertek, Lawyers): Perform independent inspections and validations as required.
Senior Management: Approves or rejects the seller based on the due diligence report.

All personnel must document their actions and escalate any red flags immediately.

Definitions

BLCO: Bonny Light Crude Oil, a Nigerian crude grade exported via NNPCL.
Red Flags: Indicators of potential fraud, such as upfront fees or unrealistic discounts.
KYC: Know Your Customer, a process for verifying identity and background.
NNPCL: Nigerian National Petroleum Company Limited, the primary authority for BLCO exports.

Due Diligence Procedure

Follow these steps sequentially. Document all findings in a Due Diligence Report Template (Appendix A). If a red flag is identified at any stage, pause the process and escalate to senior management. Estimated total timeline: 2-4 weeks.

Step 1: Initial Screening (Timeline: 1-2 days)

1.1 Receive and log the seller’s offer, including details like company name, contact information, proposed volume, price, and delivery terms.

1.2 Check for immediate red flags (refer to the table above).

1.3 If red flags are present, reject the offer and document reasons. If none, proceed.

Step 2: Corporate Verification (Timeline: 2-3 days)

2.1 Verify the seller’s corporate registration via Nigeria’s Corporate Affairs Commission (CAC) database and international sources (e.g., Dun & Bradstreet).

2.2 Confirm oil sector credentials, including NNPCL registration.

2.3 Screen for sanctions and political exposure using tools like World-Check or OFAC lists.

Step 3: Allocation and Title Validation (Timeline: 3-5 days)

3.1 Request proof of product allocation (e.g., ATS, Allocation Letter).

3.2 Independently verify with NNPCL’s Crude Oil Marketing Division using official contacts.

3.3 Reject if documents are unverifiable or appear forged.

Step 4: Documentation Review (Timeline: 3-5 days)

4.1 Collect key documents: SPA, Commercial Invoice, PI, B/L, Certificate of Origin, Q&Q Report, Q88.

4.2 Engage third-party verifiers for authentication.

4.3 Ensure SPA includes standard clauses on title, quality, delivery, and payment.

Step 5: Operational and Physical Verification (Timeline: 5-7 days)

5.1 Conduct KYC on key personnel.

5.2 Perform site inspections and use vessel tracking services.

5.3 Request independent Q&Q testing if applicable.

Step 6: Financial and Reference Checks (Timeline: 2-4 days)

6.1 Review financial statements, bank references, and credit reports.

6.2 Contact references and search for complaints.

6.3 Prefer secure payment terms like SBLC/BG.

Step 7: Risk Assessment and Decision (Timeline: 1-2 days)

7.1 Compile findings into the Due Diligence Report and assign a risk rating: Low, Medium, or High.

7.2 Present to senior management for approval.

7.3 If approved, include ongoing monitoring in the contract.

Legitimate Ways to Procure BLCO

Direct from NNPCL: Apply for term contracts or spot cargoes via official tenders.
Authorized Offtakers/Traders: Buy from verified entities like TotalEnergies Trading (TOTSA), Shell Trading (STASCO), or Glencore.
Off-OPEC Market: Use credible brokers with NNPCL ties, following procedures like ICPO, SPA, and PB.
Recommended Platforms: Trade directories like Volza or Go4WorldBusiness, with independent cross-checks.

Avoid social media or unsolicited offers, as they are scam hotspots.

Training and Compliance

Train relevant staff annually on this report and SOP.
Non-compliance may result in disciplinary action.
Update for regulatory changes.

Recommendations and Conclusion

Risk Rating Guidance: Proceed only if low/medium risk after full verification.
Next Steps: For specific sellers, apply the SOP and provide details for targeted checks.
Final Note: Trust in crude oil deals must be verified through rigorous processes. Engage professionals early to avoid losses. This report is for informational purposes and not legal advice.

References

NNPCL Guidelines on Crude Oil Sales.
International Chamber of Commerce (ICC) Uniform Customs and Practice for Documentary Credits (UCP 600).
OFAC Sanctions Lists.
Industry Reports on Nigerian Oil Scams (e.g., from U.S. Department of State).