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How to Start Oil and Gas Business in Nigeria with Low Capital

Last modified about 1 month ago by . Posted in School News |

How to Start Oil and Gas Business in Nigeria with Low Capital 2020 – The Ultimate Guide.

Oil and Gas Business in Nigeria… According to the oecd.org, “Crude drilling is outlined because the quantities of oil extracted from the bottom when the removal of inert matter or impurities.”

This oil is typically between yellow to black in color, contains a combination of hydrocarbons, and incorporates a variable density and consistence.

What’s Crude Oil Business?

Oil and gas business is basically the arrangement of dealings between a fossil oil purchaser and a vender of oil and gas for a commission once the deal is done. A crude oil dealer that plays the role of a vender or purchaser becomes a principal party to the fossil oil dealings.

The deal is initiated by the oil and gas dealer.


Business Opportunities In fossil oil Brokerage.

Before venturing into the oil and gas business, there are some terminologies you need to grasp, that conjointly defines the assorted opportunities inside the oil sector with reference to fossil oil commerce. These include:

1. FREE ON BOARD (F.O.B)

In this scenario, the vendor can load the vessel with the oil merchandise and canopy the value of exportation and transportation to the customer.

2. TANKER TAKE OVER (T.T.O)

In this scenario, the customer takes over the hiring of the vessel and all of the merchandise aboard.

3. TANKER TO TANKER CONVEYANCE (T.T.T)

In this scenario, the customer can rent their own vessel then use it to shop for the merchandise from the vendor.


Setting Up Your fossil oil Brokerage Business.

STEP 1: REGISTER A CORPORATION OR FIRM

Before you venture into the business of oil and gas, you should register your corporation  or firm. By doing this, you get a legal structure that separates your personal liabilities from your business’s. It also gives your business credibility.

STEP 2: ESTABLISH AN ALLOCATION FOR YOUR FIRM OR CORPORATION

After registration, partner up as a broker with a corporation World Health Organization already incorporates a fossil oil allocation from the NNPC. Having a fossil oil allocation suggests that you have got a set allocation issued to you for a set quantity of your time.

STEP 3: SOURCES FOR CUSTOMERS WHO WOULD PURCHASE FROM YOU

After forming a partnership with the  associate allottee, what comes next is to search out purshasers. Organizations that petroleum products are refineries, and as a result, are perpetually on the lookout for corporations which will  satisfy their wants

STEP 4: GIVE PROOF OF FINANCE TO THE REGULATORY BODY IN THE COUNTRY OF BUSINESS.

With your ICPO in hand, you’ll approach your assigned partner, and your partner would in turn request an offer from the regulatory body.

In Nigeria, for example, the Nigerian National Petroleum Commission is the regulatory body.

Here, the NNPC would require that you just show a symbol Of Finance (POF). This can be done as a result of the NNPC’s vessel won’t simply travel across the globe to a purchaser, while not the reassurance that if the customer refuses to pay, they’d still get paid a method or another.

Depending on the number needed for the Proof of Finance (POF), the plant might either give the POF or might request that you just give it. Once the POF showing the whole add is obtainable, the NNPC would then create provision for a full allocation for the provision.

STEP 5: THE REGULATORY BODY SHIPS THE FOSSIL OIL TO THE CUSTOMER.

Now the NNPC would ship the fossil oil product victimization their vessels to the plant where they’re within the world.

STEP 6: YOU’RE PAID A MINIMUM OF $1 COMMISSION PER BARREL SOLD-OUT.

After cargo is complete and therefore the NNPC has received payment, the customer would conjointly then pay your partner company with the allocation, a minimum of $1 per barrel, that the corporate, supported your agreement with them, would then credit your company’s checking account. If your banking coordinates were listed within the SPA, the fossil oil purchaser would conjointly pay your commissions directly.

The fascinating a part of the fossil oil brokerage business is most needs are perpetually in countless barrels. Thus if your dealings coated twelve million barrels of fossil oil, as an example, the fossil oil purchaser would pay a minimum of $12 million bucks in commissions, since about $1 is what is paid on every single barrel of oil.

Since there’s typically a complete commission of concerning $4 to be paid in each dealings, if you’re not during a long list of brokers, you’ll earn a minimum of $1 per barrel, creating it a full $12 million bucks.

If you’re lucky enough, you’ll get a far larger contract that covers a monthly offer to the plant for a amount of your time, presumably running into years.

The high returns from this venture makes it one in all the foremost profitable oil and gas business opportunities within the world, as a result of as a fossil oil broker, you simply need $0 to run your operations.


Challenges of the fossil oil Brokerage Business.

1). Problem in securing allotment forces you to separate revenues with somebody World Health Organization has.

2). It slow can be wasted as a result of long conversations with refineries World Health Organization haven’t any real cash to pay.

3). Obtaining a fossil oil purchaser to indicate a symbol of Finance (POF) for the NNPC will be troublesome.

4). The massive pool of fraudsters movement as fossil oil brokers makes it troublesome for fossil oil consumers to trust you.

Conclusion.

The success or otherwise of oil and gas business as is most business depends heavily on networking and partnering with the right clients and customers, standard business practices and more. By building a reputable name and perpetually delivering on your guarantees to your shoppers, you’d succeed better.

Frequently Asked Questions – FAQs.

♦ Do i need a degree in petroleum engineering or geology to start oil and gas business?

No, you don’t. You can always contract the services of these professionals when the need arises.

What’s your take on this? We believe this article was helpful, if yes, don’t hesitate to share this information with your friends on Facebook, Twitter, Whatsapp and Google +

NG Team.

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