VESSEL TO TANK (VTT) CIF PROCEDURE (Crude Oil & Petroleum Products)

Incoterms: CIF 2020 (with VTT delivery variation at discharge port)
Delivery Location: In Seller’s chartered vessel tanks berthed at Discharge Port (Fujairah, Jurong, Rotterdam, or Houston).
Mode of Delivery: Vessel to Tank (VTT) – Cargo remains in vessel tanks until unloaded/discharged into Buyer-nominated shore tanks at the discharge port.
Pricing: Negotiable based on Platts NWE / Mediterranean / Arab Gulf (AG) / Fujairah Platts / Singapore MOPS
Price basis: Gross CIF/VTT = FOB TTV load port (relevant Platts) minus agreed discount + freight + insurance
Inspection: Independent (SGS / Intertek / Saybolt or equivalent) at load port (binding for quantity, quality and payment); discharge port inspection for information/claims only
Payment terms: 100% payable via confirmed, irrevocable, transferable Documentary Letter of Credit (MT700) or SBLC (MT760) against presentation of standard shipping documents and load-port Q&Q certificate
Commissions: Capped at 1–2% of transaction value, protected via signed IMFPA/NCND
Offer validity: Subject to product and vessel availability; price to be confirmed and fixed prior to SPA

This procedure is designed for spot or short-term VTT CIF transactions (volumes ≥50,000 MT) in key bunkering hubs, aligned with industry best practices from major players (BP, Shell, Vitol, Trafigura) and Incoterms 2020. It prioritizes efficiency, mutual security, fraud prevention, and standardization. Note: VTT variations (keeping cargo in vessel tanks at port for direct discharge) are used in high-volume ports like Fujairah/Rotterdam for petroleum products, but full POP pre-security, unconditional dip tests in vessel tanks, or MT103 post-dip are non-standard and high-risk elements not used by institutional traders.

Governing General Terms and Conditions (GTCs): To enhance credibility and neutrality, all transactions under this procedure has been incorporated by reference the BP Oil International Limited General Terms and Conditions for Sales and Purchases of Crude Oil and Petroleum Products, 2015 Edition (Version 1.2) as the base GTCs (available at: https://www.bp.com/content/dam/bp/business-sites/en/global/bp-supply-trading-and-shipping/documents/bp-oil-gtc-2015-version-1.2.pdf).

These BP GTCs are widely accepted as a neutral standard in the industry (used by traders like Vitol and Trafigura with minor amendments). Where applicable for specific deals, parties may mutually agree to substitute or amend with Shell’s General Terms and Conditions for CIF and CFR Deliveries (2023 Edition, available at: https://www.shell.com/business-customers/trading-and-supply/general-trading-terms-and-conditions.html).

In case of conflict, the Special Provisions in the SPA shall prevail over the referenced GTCs.

Key Principles

  • Timeline: Target 21–30 days from inquiry to discharge/injection.
  • Payment: 100% via confirmed, irrevocable, transferable Documentary Letter of Credit (DLC MT700) or Standby Letter of Credit (SBLC MT760).
  • Risk Transfer: At load port permanent hose connection (per referenced GTCs).
  • Inspection: Independent (SGS, Intertek, Saybolt) at load port (binding for price/quantity).
  • Commissions: Capped at 1–2% of transaction value, protected via signed IMFPA/NCND.
  • Law & Arbitration: English law; ICC or LCIA arbitration (London or Singapore), unless otherwise specified in the referenced GTCs.

Step-by-Step Procedure

  1. Buyer Inquiry & Seller Response (Days 1–3)
    • Buyer submits Letter of Intent (LOI) or Irrevocable Corporate Purchase Offer (ICPO) including:
      • Product specification and volume (±10%)
      • Target discharge port(s) (Fujairah/Jurong/Rotterdam/Houston) and laycan
      • Buyer’s full KYC/CIS (company profile, certificate of incorporation, passport of signatory)
      • Banking coordinates for DLC issuance
      • Buyer-nominated shore tank details (TSR/TSA at discharge port)
    • Seller responds with Firm Corporate Offer (FCO) or draft Pro-Forma Invoice containing:
      • Full product specification and availability
      • Price formula (relevant Platts minus discount + freight + insurance)
      • Load port and laycan
      • Confirmation of reference to BP GTCs 2015 (Version 1.2) or agreed alternative
    • Mutual NDA signed if required. No binding commitment yet.
  2. Contract Negotiation & Execution (Days 3–7)
    • Seller issues draft Sales Purchase Agreement (SPA) incorporating:
      • Special Provisions (transaction-specific details, including VTT discharge)
      • Referenced General Terms and Conditions (BP GTCs 2015 Version 1.2 by reference or appendix link)
    • Parties negotiate and finalize terms (price, laycan, discharge port/berth, inspection, demurrage).
    • Both parties sign the SPA electronically (DocuSign) or wet-ink (notarized/legalized if required by buyer’s bank).
    • Signed SPA returned to both parties and brokers (if any).
  3. Payment Instrument Issuance & Partial Proof of Product (Days 7–10)
    • Buyer instructs its bank to issue confirmed, irrevocable, transferable DLC (MT700) or SBLC (MT760) for 100% of cargo value, valid 90 days, operative upon presentation of shipping documents.
    • Buyer’s bank sends SWIFT pre-advice (MT799) to Seller’s bank.
    • Upon receipt and verification of pre-advice or operative instrument, Seller provides Partial Proof of Product (any 3–4 of the following):
      • Product passport/allocation summary
      • Commitment letter to supply
      • Tank Storage Receipt (TSR) or Authority to Sell (ATS) at load port
      • Q88 vessel questionnaire
    • Important: No full Proof of Product (complete shipping documents, recent SGS reports, ATV, injection reports) is provided before the operative payment instrument is in place.
  4. Vessel Nomination & Pre-Loading (Days 10–17)
    • Seller nominates performing vessel (laycan ±3 days) with full details (IMO, flag, ETA load port).
    • Buyer accepts or rejects vessel within 48 hours (rejection only on reasonable grounds).
    • Joint independent inspector appointed and funded as per SPA/referenced GTCs.
    • Seller provides Charter Party (C/P) abstract and export clearance.
    • Loading commences within laycan; Q&Q inspection performed at load port (binding).
  5. Loading, Sailing & Document Presentation (Post-Loading, Days 17–21)
    • Cargo loaded; vessel sails to discharge port.
    • Seller prepares and couriers (within 5 banking days of Bill of Lading date) the full set of shipping documents to Buyer’s bank (as detailed in referenced GTCs):
      • 3/3 original Clean On Board Bills of Lading (marked “Freight Prepaid”, “To Order”)
      • Signed Commercial Invoice (3 originals)
      • Insurance Certificate/Policy (110% of invoice value, Institute Cargo Clauses A, transferable)
      • Certificate of Quantity & Quality (load port, issued by independent inspector)
      • Certificate of Origin
      • Cargo Manifest
      • Ullage Report
      • Charter Party agreement
    • Documents must strictly conform to DLC terms.
  6. Payment, Vessel Arrival & Title Transfer (Days 21–25)
    • Buyer’s bank examines documents; if conforming, releases 100% payment to Seller’s bank via DLC drawdown.
    • Upon confirmation of clean funds, Seller endorses original Bills of Lading to Buyer and releases any cargo lien.
    • Title and risk formally transfer to Buyer (retroactive to load port hose connection).
    • Vessel arrives at discharge port; Buyer provides port instructions and Tank Storage Receipt (TSR) 7 days prior to ETA.
    • Final adjustments (if any, e.g., discharge Q&Q variance >0.5%) settled via MT103 within 5 banking days.
  7. Discharge/VTT Injection & Close-Out (Post-Arrival)
    • Vessel berths; Notice of Readiness tendered.
    • Cargo discharged directly from vessel tanks to Buyer-nominated shore tanks (VTT mode) under joint supervision.
    • Discharge Q&Q performed (for information/claims only).
    • Demurrage/laytime settled as per SPA and referenced GTCs/C/P terms.
    • Final reconciliation and closure within 30 days.

Risk Mitigation Guidelines

  • We will never provide or accept full Proof of Product before operative payment instrument.
  • Will cap total intermediary commissions at 1–2% of transaction value.
  • Use only top-200 world banks for payment instruments.
  • Explicitly exclude sanctioned origins/entities (Russia, Iran, Venezuela, etc.) in SPA.
  • We may include ESG/sustainability clause if trading renewable products.

Important Notes

  1. No Extra Fees → No terminal fees, port charges, or “facilitation payments” outside agreed SPA.
  2. Q&Q Variance → >0.5% triggers deduction/adjustment.
  3. Force Majeure & Disputes → Governed by referenced GTCs and ICC rules, arbitration in Singapore / London (as per SPA).
  4. Pricing Lock → 7 days before loading: Final CIF/VTT per MT = Relevant Platts (5-days avg) – Discount + Freight + Insurance.

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.

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Disclaimer : We hereby declare that we do not accept or source any fuel or petroleum products from Russia, Iran, or any other sanctioned country.

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