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Nigeria: Drilling rigs not vessels, not subject to 2% surcharge

Nigeria: Drilling rigs not vessels, not subject to 2%

The Court of Appeal, sitting in Lagos, issued a judgment holding that drilling rigs are not vessels within the meaning of the Coastal and Inland Shipping (Cabotage) Act and are, therefore, not subject to a 2% surcharge on payments under the drilling contracts.


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The case is:  Transocean Support Services Nigeria Ltd. v. Nigerian Maritime Administration and Safety Agency (24 June 2019)

The appellate court found:

  • A drilling rig is not listed as a vessel to be registered under the Cabotage Act, in that it is not used for transportation of goods or passengers from one point in Nigeria to the other.
  • A drilling rig can only be classified as a vessel if it is designed, used or capable of being used solely or partly for marine navigation for the carriage of persons or property on, through and under water.

KPMG observation

The decision closely comes after a June 2019 decision of the Federal High Court that held that a “drill ship” was a vessel used solely for marine navigation, carriage of workers and operational equipment, and the storage and transportation of oil and gas products. The Court of Appeal decision takes precedence over the high court judgment.

Read a July 2019 report [PDF 140 KB] prepared by the KPMG member firm in Nigeria

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