When Is A Rig Not A Vessel?

The Question and the Answer

For more than a decade, one question has sat at the centre of Nigeria’s offshore cabotage regime: when does a drilling rig become a “vessel” for the purposes of the Coastal and Inland Shipping (Cabotage) Act, 2003 (the Cabotage Act)?

The answer matters commercially as much as legally. Classification as a vessel under the Act triggers Nigerian registration requirements, ownership and manning thresholds, waiver applications for foreign operators, and an obligation to remit a surcharge of 2% of contract value into the Cabotage Vessel Financing Fund administered by the Nigerian Maritime Administration and Safety Agency (NIMASA).

In December 2025, the Supreme Court of Nigeria, in Noble Drilling (Nigeria) Ltd v. NIMASA & Anor, delivered the clearest answer yet under the current Act. On the facts before it, the Court held that the jack-up and semi-submersible rigs in issue, and the drilling operations conducted by them, did not constitute “vessels” or “coastal trade” within the meaning of the Cabotage Act.

The position, however, is not necessarily fixed for all time. Legislative proposals before the National Assembly may yet expand the statutory definition Mto capture drilling rigs and mobile offshore drilling units.

This article examines the statutory framework, the lower-court divergence, the Supreme Court’s reasoning, and what the decision means for offshore operators in a regulatory landscape that may still evolve.

The Statutory Starting Point

The Cabotage Act was enacted to promote indigenous participation in domestic coastal shipping. It reserves cabotage trade to vessels that are:

➔ registered in Nigeria;

➔ wholly owned by Nigerian citizens;

➔ built in Nigeria; and

➔ wholly manned by Nigerian citizens,

subject to ministerial waivers where statutory

conditions are satisfied.

Section 2 of the Cabotage Act defines “coastal

trade - or “cabotage - principally as the carriage of goods or passengers by vessel within Nigerian waters, including carriage connected to the exploration or exploitation of natural resources.

Section 2 also adopts an expansive definition of

“place above Nigerian waters - extending it to an offshore drilling unit and any anchor cable or rig pad used in connection therewith.

That breadth suggests why the controversy

persisted, even though the Act’s separate definition of “vessel - remains anchored to marine navigation and carriage of persons and property.

Sections 42 and 43 establish the Cabotage Vessel

Financing Fund and impose a 2% per cent

surcharge on the value of contracts performed by vessels engaged in cabotage trade.

The Definitional Fault Line

The Cabotage Act contemplates

vessels designed, used or capable of being used for marine navigation and for the carriage of persons or property on, through or under water.

Section 22(5) sets out categories of

vessels eligible for registration, including passenger vessels, crew boats, barges, offshore service vessels, tugs, anchor handling tugs and supply vessels, floating petroleum storage units, dredgers, tankers and carriers, and “any other craft or vessel used for carriage on, through or underwater of persons, property or any substance whatsoever - .

Drilling rigs were not expressly listed in section 22(5). That omission, when

read together with the Act’s emphasis on navigation and carriage, became central to the litigation that followed.

Guidelines, Delegation, and Statutory Limits

In 2007, the Federal Ministry of Transportation issued Guidelines on the

implementation of the Cabotage Act (the Guidelines). The Guidelines sought, in practice, to effectively enlarge the scope of cabotage regulation by expressly including drilling rigs within the category of vessels subject to registration and surcharge requirements.

NIMASA, acting under delegated authority, consistently enforced this position,

demanding waiver applications and the payment of the 2% surcharge by operators of offshore drilling units.

The core legal tension, therefore, was not merely operational, but

constitutional and interpretative: whether delegated instruments could expand the statutory definition beyond the literal text enacted by the National Assembly.

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