John Myers, Business Reporter

The Petroleum Corporation of Jamaica corporate offices at Trafalgar Road, New Kingston. - File

Jamaica has lifted no oil from Nigeria since the contract was awarded to Glencore Energy Limited, and Jamaica's petroleum agency which oversees such arrangements says it is yet to be advised by Lagos when supplies would be available.

"We have not got anything to lift as yet," said chairman of the Petroleum Corporation of Jamaica, Ian Moore.

"No cargos have been made available to Jamaica as yet," he told the Financial Gleaner on Wednesday. But Moore added that it was "not uncommon" for Jamaica to go for a while without supplies, saying it was the nature of the arrangement.

Concessionary terms

Nigeria supplies crude on concessionary terms to Jamaica when supplies permit.

"There has never been an empirical basis ... on which cargos are assigned," Moore said. "It is not even on a matter of surplus; it's a matter of countries sharing similar ideologies and it's an offer of some kind of assistance," he added.

The deal was originated in 1978, struck between then Jamaican prime minister, the late Michael Manley, and Nigerian president, Olusegun Obasanjo, who was voted out of office last year.

The oil is not consumed by Jamaica, but is sold on the market by the lifting agent, which shares the profit with Jamaica. Jamaica gets 12.5 US cents per barrel lifted.

New agent

Glencore was named the new agent for the lifting of oil under contract between the PCJ and Nigerian National Petro-leum Corporation (NNPC), after a controversy developed with former agent, Trafigura, and the contract was retendered under pressure from the contractor general.

As was agreed during the '70s, the oil deal allowed for Jamaica to lift 5.475 million barrels of light crude, the equivalent of 15,000 barrels per day, at prices set by Nigeria.

The contract was renewable annually and supplies were eventually increased to 20,000 barrels daily in 1990 and currently, to 30,000 barrels daily or 10.95 million barrels yearly.

Although the draw down has been, for the most part, less than the prescribed allotment, the oil venture has been a very lucrative one for Jamaica, generating some US$4.64 million in earnings up to 2006 for the PCJ.

The reason for the 'drought' on cargo assignments could not be established, but Nigeria's oil industry has seen a 20 per cent drop in exports in comparison to 2006, due to attacks on oil infrastructure and kidnappings by militants.

Under the contract with the United Kingdom-based agent, the PCJ pays Glencore 12.5 US cents from the margin for every barrel of oil lifted and sold, as obtained under the last negotiated contract with Trafigura. The terms of the arrangement are renegotiated yearly between PCJ and NNPC, which, in turn, influences the lifting contract.

The contract with Trafigura, a Dutch firm, ended in controversy last year after a fire storm erupted over a $31-million payment to members of the then ruling Peoples' National Party. The contract was subsequently put to tender and the PCJ, based on submissions from four entities, selected Glencore to lift and trade the oil on Jamaica's behalf.

Glencore's Martin Wakefield, who manages Jamaica's account, refused to comment on the situation when contacted on Thursday at his London office, but only after confirming that his firm had not lifted any oil for Jamaica since receiving the contract.

Over the years, the Nigeria oil profits have financed large and small-scale energy related research on oil exploration, renewable technologies, energy conservation programmes, the pre-feasibility study on Liquefied Natural Gas and the acquisition of the Font Hill property in St Elizabeth.

But the downside to the deal has been the way in which Jamaica gets the oil, which is based entirely on the discretion of the NNPC.

"We cannot get a cargo unless it is assigned (and) we have no leverage in determining whether we get a cargo or not," Moore emphasised.

He said the delay would not impair the contract with Glencore Energy.

"Glencore won the bid and they put up a performance bond in order to secure the contract and so once there is nothing to lift, they won't have anything to do," Moore said.

john.myers@gleanerjm.com