Essential Steps for Successful D6 Fuel Transactions at FOB Rotterdam and Houston Ports

Fuel trading, especially involving large volumes like 100 million gallons of D6 fuel, demands precise coordination and clear procedures. When dealing with FOB Rotterdam and Houston ports, understanding the transaction workflow is crucial to avoid delays and ensure smooth delivery. This post outlines the essential steps for managing D6 fuel transactions, focusing on the operational and documentation requirements that buyers and sellers must follow.

D6 fuel tanker docked at Rotterdam port, ready for loading

Buyer Issues ICPO and Tank Storage Agreement

The transaction begins when the buyer issues an Irrevocable Corporate Purchase Order (ICPO) after receiving the seller’s Soft Offer. This ICPO must be accompanied by a Tank Storage Agreement (TSA) as proof that the buyer has secured storage capacity for the fuel. The TSA confirms that the buyer can receive and store the product once delivered, which is a critical step to avoid logistical issues.

Seller Provides Commercial Invoice and NCNDA/IMFPA

Once the ICPO and TSA are received, the seller issues a commercial invoice for the available quantity in the storage tank. The buyer reviews, signs, and returns the commercial invoice along with a copy of the Non-Circumvention, Non-Disclosure Agreement (NCNDA) and International Master Fee Protection Agreement (IMFPA). These documents protect the interests of all parties and clarify commission structures for intermediaries involved.

Dip Test Authorization and Product Proof of Ownership

The seller then issues a Dip Test Authorization letter, allowing the buyer to conduct a dip test on the product in the seller’s tank. This step includes the buyer’s tank farm endorsement and several key documents:

• Legalized Commercial Invoice

• Product Passport

• Product Availability Endorsement

• Authority to Sell and Collect (ATSC)

  
  

These documents serve as proof of product ownership and availability, building trust before the physical transfer.

Conducting the Dip Test and Injection Process

After receiving the Dip Test Authorization, the buyer arranges for an independent inspection company, such as SGS, to perform the dip test at the seller’s tank. The buyer covers the cost of this test. The inspection report confirms the quality and quantity of the D6 fuel. Upon successful dip test results, the seller injects the fuel into the buyer’s leased storage tank and provides a full injection report.

Fuel dip test being conducted at a storage tank

Payment and Commission Procedures

Once the injection report is submitted, the buyer makes a 100% payment for the total product quantity via MT103 wire transfer. The seller confirms receipt of payment and pays commissions to all intermediaries within 24 hours, as outlined in the IMFPA/NCNDA agreements. This prompt payment and commission process ensures all parties are compensated fairly and maintains trust.

Drafting and Approving the Sales and Purchase Agreement

Following the initial transaction, the seller drafts a Sales and Purchase Agreement (SPA) for monthly deliveries. The buyer reviews and approves the SPA, then issues an irrevocable, transferable, and auto-revolving Standby Letter of Credit (SBLC) or Irrevocable Documentary Letter of Credit (IRDLC) covering the contract’s shipment value. This financial instrument guarantees payment for each monthly lift after a dip test confirms product quality.

Scheduling Subsequent Deliveries

With the SPA and financial guarantees in place, subsequent deliveries proceed according to the agreed schedule. Each shipment follows the same dip test and payment procedures, ensuring consistent quality and timely payments. The seller continues to pay commissions to intermediaries as per the agreed terms.

Tanker unloading D6 fuel at Houston port

Key Takeaways for Buyers and Sellers

• Clear documentation is essential at every step to protect all parties and confirm product availability.

• Dip tests provide independent verification of fuel quality and quantity before payment.

• Secure storage agreements prevent logistical problems during delivery.

• Prompt payments and commission settlements maintain trust and smooth operations.

• Financial instruments like SBLC or IRDLC guarantee payment for ongoing shipments.

  
  

Understanding and following these steps helps buyers and sellers avoid common pitfalls in large-scale D6 fuel transactions at FOB Rotterdam and Houston ports. Clear communication, verified documentation, and adherence to agreed procedures ensure successful deals and long-term partnerships.