In oil buying process we strictly adhere to our established procedures, which are neutral, transparent, and structured to prevent scams and fraud in the oil trade. Our processes are designed to ensure compliance, security, and fairness for all parties involved.

EN590 ULSD 10ppm

CIF Procedures / Payment instructions / Pricing Formula instructions

EN590 ULSD 10ppm
CIF Procedures / Payment instructions / Pricing Formula instructions
Procedure:
1. The Buyer sends LOI with POF to the Seller along with KYC / CIS, Terminal name of Discharge Port.
a. LOI to confirm that Buyer has funding in place. If Buyer has a funding partner, then KYC / CIS must be provided on the funding partner. Note: Funding partner will need to sign SPA.
b. LOI to confirm that the Buyer is willing, able and capable to receive product.
Note: if buyer has an exit buyer / end user lined up, Buyer must have everything in order with their exit buyer / end user before issuing LOI
2. The Seller issues FCO to Buyer after Due Diligence on the Buyer.
3. The Buyer signs the FCO for acceptance and returns it back the Seller. Buyer also issues an ICPO as per the procedures in the FCO.
a. ICPO must be signed by the legal representative with their Passport
b. ICPO must have the CIS and company incorporation certificate or trade license.
c. Buyer must provide preferred loading schedule
4. Seller issues draft Sales and Purchase Agreement (SPA) to the Buyer. Buyer returns SPA signed and stamped.
a. Note: if Buyer has a funding partner, funding partner has to also be a signatory to the SPA.
5. Seller sends to Buyer the Proforma Invoice for the Base Price. Within 5 days of receiving the Proforma invoice, Buyer issues within maximum 5 working days draft of DLC verbiage of irrevocable, transferable, divisible, 60 days valid letter of credit via swift MT199 to refinery nominated account. Refinery nominated bank will confirm draft of DLC by swift to buyer’s bank. After confirmation of the final draft, Buyer will issue partial DLC by swift MT700.
6. After acceptance of payment instrument by the seller’s bank,
a. seller will provide document showing Refineries commitment
b. Seller and Buyer agree to the loading schedule. Note seller has the ability to dispatch the vessel within 14 days of receiving the DLC. Once vessel is dispatched, seller will issue following documents:
• 3 original and 3 non-negotiable copies of full set of ocean bill of lading “clean on board” marked “freight prepaid consignee as per LC issuer or nominee
• Certificate of country origin ( Saudi Arabia/India)
• Product passport (analysis result)
• Ullage report
• Injection report from port of origin
• Vessel manifest
• Vessel’s Q88.
• Seller’s certificate of quality and quantity countersigned by the appointed independent inspector.( SGS only)
• Copy of Notice of Readiness from cargo vessel’s captain or master
that the vessel has reached destination (NOR)
7. Buyer is obliged, after issuing the documents sent, to provide valid TSR (Tank Storage receipt) in the destination port and send instructions for receiving the vessel in the destination port minimum 5 days prior to vessel arrival. Buyer also obtains port access permit code (PAPC) based on Q88 from port authorities in the port of destination.
8. After arrival of the vessel , buyer will confirm the receipt of the cargo in full as per Q&Q report carried at final destination.
9. Based upon final and full Q&Q, Buyer will instruct the bank to release DLC and the seller will instruct the bank to draw on DLC issued. Buyer will also make the difference payment (based on Q&Q) by MT103 to the Sellers UAE Entity. Upon Seller receiving the MT103 and successfully drawing down on the DLC the Seller will release the vessel at destination port.
10. Seller after bank confirmation will issue Certificate of Ownership in buyer’s name and change the Title of goods to the buyer.
Pricing formula instructions :
A Base price per metric ton on CIF terms will be agreed for the term of the SPA for the issuance of the DLC.
However, each shipment will/may have a different value from the DLC based upon market fluctuation and the agreed upon discount between Buyer and Seller.
7 days prior to loading of vessel at Origin a Price per metric ton will be fixed based upon the agreed discount using Mediterranean Platts.
The true value of the cargo will be based upon the 7 days before loading fixed price and the Q&Q report.

Step-by-Step CIF Transaction Procedure

A. Initial Offer & Documentation Exchange

  1. Quotation Issuance
    • The seller/reseller provides a formal quotation, including seller or shipper’s company credentials, registration, and contact details, with an official seal, addressed to the buyer.
  2. Seller Issues Full Corporate Offer (FCO)
    • The seller provides an FCO along with:
      • Signatory ID/Passport Copy
      • Complete CIS (Customer Information Sheet)
      • Government-issued Fuel Export License copy

B. Exchange of Agreements

  1. Buyer Issues letter of Intent (LOI) to Purchase:
    • The buyer submits an Irrevocable Corporate Purchase Order (ICPO) along with:
      • Signatory ID/Passport Copy
      • CIS (Customer Information Sheet)
  2. Seller Shares RECAP & Issues Pro-Forma Invoice and SPA:
    • The seller provides a RECAP summary.
    • The seller issues the Pro-Forma Invoice & Sales Purchase Agreement (SPA) for buyer review.

C. Commercial Invoice & Proof of Product (POP)

  1. Commercial Invoice Agreement
    • Both the buyer and seller sign the Commercial Invoice (CI), which includes freight and insurance costs.
  2. Provision of Proof of Product (POP)
    • The seller provides the following POP documents to verify product authenticity and readiness:
      • Authorization to Sell and Collect (ATSC)
      • Certificate of Origin and EUR1/5 Certificate
      • Product Passport (Quality Analysis)
      • Recent SGS Report
      • Injection and storage documentation at the loading port
      • Unconditional Dip Test Authorization (UDTA) at the loading port

D. Due Diligence & Payment Instrument Setup

  1. Verification and Dip Test Scheduling
    • The buyer verifies documents within 2–3 business days.
    • The buyer arranges a Dip Test with SGS (or equivalent) at their own expense.
  2. Offer to Purchase (OTP) Submission
    • The buyer issues an OTP containing:
      • Banking references
      • Company profile and registration details
      • Buyer’s passport copy
      • RWA Letter signed by two bank officers

E. SPA Execution & Financial Instrument Setup

  1. Sales Purchase Agreement (SPA) Execution
    • Buyer and seller sign the SPA/Contract, including commission agreements.
    • Facilitator/agent commission details are appended and bank-registered.
  2. Pre-Advice LC (MT 799) Issuance: The buyer’s bank issues a Pre-Advice Letter of Credit (MT 799) to the seller’s bank, signaling intent to pay.

F. Shipment Preparation & Execution

  1. Notice of Readiness (NOR): The seller’s vessel sends the Notice of Readiness (NOR) to the buyer’s port and all involved parties.
  2. Irrevocable Letter of Credit (MT 700) Issuance: The buyer’s bank issues an Irrevocable Documentary LC (MT 700) to the seller’s bank for payment guarantee.
  3. Shipment & Documentation Submission:  Upon receipt of the LC swift, the seller’s vessel departs within 7 days. The seller sends shipping documents to the buyer’s bank, including:
    – CPA copy ( Charter Party Agreement Copy) between Vessel owner & seller.
    – Contact Detail of the Shipping line who has booked the Vessel.
    – Bill of Lading
    – Cargo Manifest
    – Certificate of Origin (COO)
    – Product quality passport (Analysis test Report)
    – Q&Q certificate with full report issued by SGS/Intertek/Saybolt – Corelab or Equivalent.
    –  Vessel Q88.
    – Ullage Report
    – NOR.
    – Time Log Sheet.
    – Ship’s Tank Dry/Cleanliness Certificate.
    – Master’s Receipt of sample & Documents.
    –  Product release note.
    – Seller’s Product Export License
    – Seller’s company registration
    – Custom Clearance documents from last port for shipping agent to verify
    – Commitment to Supply.
    – Commercial Invoice
    – ATSC

G. Delivery & Final Inspection : Vessel Arrival & Final Q&Q Inspection by a DIP test at discharge port

  • The vessel arrives at the buyer’s port.
  • The buyer conducts Q&Q inspection through a DIP test at their own expense.

H. DIP Test Result and Payment:
If DIP test result comes positive and matching with the load port Q&Q report Buyer accept the documents and bank transfers payment within 72 hours by MT103 and seller transfers titleholding to buyer. Buyer parallelly completes Vessel to Tank  injection of fuel related paper works with the shipping company.

If DIP test result differs with the load port Q&Q report then buyer and seller will discuss the issue amicably as per SPA.

Important Considerations:

  • Supplier Credentials: Ensure the supplier provides all necessary export schedules, terminal confirmations, and customs declarations.
  • Risk Mitigation:
    • Verify CPA, ATL, and vessel Q88 details.
    • Use secure banking instruments to protect funds.
  • Seller’s Expenses: Seller is responsible for inspection and verification costs at loading port (SGS and Q&Q).
  • Buyer’s Expenses: Buyers are responsible for inspection and verification costs at discharge port (SGS and Q&Q).
  • TSA Requirement: Buyer must have a valid TSA at the unloading port.
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