VESSEL / SHIP TAKEOVER (VTO/STO) – FOB PROCEDURE

Transaction Type: Sale of cargo on board + Vessel Takeover (novation / new employment of the tanker)
Delivery Point: OPL / high seas (vessel remains the same)
Price Basis: Negotiable vs Platts CIF Med (or agreed marker)
Inspection: Independent surveyor on the mother vessel
Payment: Against successful Q&Q + title documents + confirmation that vessel employment can be transferred

Procedure Sequence:

  1. Buyer Inquiry Buyer states intention to take over the loaded vessel (VTO) and the cargo on as-is-where-is basis, with intention to redirect to a nominated POD. Buyer submits: Company profile, CIS/KYC, financial capability indication, and (if available) recent fixtures showing ability to charter tankers.

  2. Seller / Owner Response Seller (or the party controlling the vessel) issues commercial offer containing:

    • Cargo quantity, quality, and latest available analysis
    • Vessel name, IMO, flag, class, approximate position (AIS)
    • Current charter status (time charter / voyage charter / bareboat)
    • Confirmation that the shipowner is willing to discuss novation or new employment
    • Indicative price and validity
    • Seller/Owner company profile + basic KYC

  3. Buyer Issues ICPO ICPO + full KYC + confirmation of willingness to take the vessel under novation or new charter terms.

  4. Contract Documents Two parallel sets of documents are required:

    • Cargo SPA between cargo seller and buyer (title, quantity, quality, payment, risk transfer).
    • Vessel employment agreement (novation of existing CPA or new time/voyage charter) involving the shipowner.

    Draft SPA must explicitly state that title to cargo and operational control of the vessel are linked and that the deal is conditional on successful novation/owner consent.

  5. Contract Finalisation Parties sign the cargo SPA. Parallel negotiation with the shipowner on novation terms, insurance, P&I, technical management, and crew arrangements begins or continues.

  6. Partial Proof of Product + Vessel Status Seller provides:

    • Latest Q&Q / injection report
    • Certificate of Origin
    • Vessel Q88
    • Current AIS position and status
    • Confirmation of tank condition / last cargoes
    • Evidence of owner’s willingness to novate (letter of intent or equivalent)

  7. POF & Surveyor Nomination Buyer confirms financial arrangement (acceptable form of POF). Buyer nominates independent surveyor for Q&Q on the mother vessel. Seller/Owner issues Authority to Board limited to the nominated surveyor.

  8. Full Access Package (after POF verification)

    • Relevant extracts of the existing Charter Party
    • Cargo Manifest
    • Latest Ullage / ROB report
    • Tank cleanliness documentation (if applicable)
    • Export documents from last load port
    • Seller’s relevant licences
    • Draft novation agreement or new charter terms from the shipowner

    Original B/L remains under banking control until payment.

  9. Inspection on Mother Vessel at OPL

    • Surveyor boards the mother vessel
    • Full Q&Q (ullage, sampling, analysis) performed
    • Fresh certificate issued

    No daughter vessel and no STS operation.

  10. Payment, Title Transfer & Vessel Takeover Upon clean Q&Q within contractual tolerances:

    • Buyer remits 100% cargo value
    • Upon confirmation of clean funds:
      • Seller endorses original B/L to Buyer
      • Title to cargo passes to Buyer
      • Novation / new charter documentation is completed with the shipowner
      • Operational control of the vessel passes to Buyer (or Buyer’s nominated managers)
    • Vessel sails under Buyer’s voyage instructions

  11. Completion Buyer now controls both the cargo and the vessel employment. All further costs (bunkers, port charges, demurrage after takeover, etc.) are for Buyer’s account as per the new employment terms.

Critical Conditions That Must Be Present for a Real VTO

  • Shipowner (or party with full right to novate) is actively involved from an early stage.
  • Clear novation agreement or new charter party is signed.
  • Insurance (Hull & Machinery + P&I) is arranged or transferred to the satisfaction of the new employment.
  • Technical management and crew arrangements are clarified.
  • Title to cargo and control of the vessel are contractually linked and pass only after payment and documentation are complete.
  • No STS language, no daughter vessel, no “Authority to Board for STS”.

Bottom Line

A pure VTO is commercially and legally heavier than a normal cargo STS sale. Most circulating “VTO/STO FOB high seas” procedures ignore the shipowner requirement and are therefore non-performing.

If the counterparty cannot produce evidence that the shipowner is willing to novate (or enter a new charter), the VTO cannot be executed, regardless of how many cargo documents are exchanged.

Buyer Credential Verification Policy:

To ensure a secure and reliable transaction process, the financial capability of buyers intending to purchase fuels will be thoroughly verified.

  • Individual Buyers: Credentials of the buyer must be provided for financial assessment.

  • Joint Ventures (JV): If the buyer is importing fuels in partnership with another financially robust entity, both parties must submit their credentials for verification.

All provided information will be reviewed to confirm the buyer’s ability to fulfill the financial obligations of the purchase.

Indemnity Clause: In the oil procurement process, we strictly adhere to our established procedures, which are designed to be neutral, transparent, and structured to prevent scams and fraud in the oil trade. These processes ensure compliance, security, and fairness for all parties involved. Our procedures apply solely subject to the availability of the product.

Email: [email protected] | gks(at)ametheus(dot)com | Phone: +91-9999999538, Whatsapp: +91-9999099538
Disclaimer: We hereby declare that we do not accept or source any fuel or petroleum products from any sanctioned country.

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