Navigating FOB Fuel Products and Vessel Takeover Processes for Smooth Transactions JET A-1($68/$66) JP54($70/$68) EN590 10PPM($470/$460) D6($0.94/$0.89)

Fuel trading involves complex logistics and strict procedures, especially when dealing with FOB (Free On Board) fuel products and vessel takeover. Understanding these processes is essential for buyers and sellers to ensure smooth transactions, avoid delays, and secure their investments. This post breaks down the key elements of FOB fuel products, vessel takeover procedures, and practical tips to navigate this market confidently.

Tanker vessel docked at port for fuel loading

Understanding FOB Fuel Products

FOB fuel products mean the seller delivers the fuel on board a vessel at the agreed port, and the buyer assumes responsibility once the product is loaded. This arrangement shifts the risk and cost from the seller to the buyer at the point of loading.

Common FOB Fuel Products and Pricing

Here are some our fuel products traded under FOB terms with indicative quantities and pricing:

• Aviation Jet Fuel A1: 1,000,000 barrels priced around $66%–$68 per barrel.

• JP54 (Colonial): 1,000,000 barrels priced around $68–$70 per barrel.

• EN590 (ULSD 10PPM): 50,000 metric tons priced around $460–$470 per metric ton.

• Virgin Fuel D6: 100 million gallons priced around $0.89–$0.94 per gallon.

• D2 Gas Oil (GOST: 305-2013): 50,000 metric tons priced around $420–$430 per metric ton.

• Eastern Siberia Pacific Ocean (ESPO): 50,000 barrels priced around $60–$62 per barrel.

• Light Cycle Oil: 50,000 metric tons priced around $360–$370 per metric ton.

• Mazut M100 (GOST: 10585-2013): 50,000 metric tons priced around $270–$280 per metric ton.

• Naphtha: 50,000 barrels priced around $360–$370 per barrel.

  
  

These prices reflect market fluctuations and depend on origin, quality, and contract terms.

Origin and Quality Standards

Most FOB fuel products come from reliable origins such as Kazakhstan, with strict adherence to specification and grade standards.

Vessel Takeover Procedure Explained

Vessel takeover (VTO) is a critical step in FOB fuel transactions. It involves rerouting the tanker vessel to the buyer’s designated destination port after the contract is secured. This process requires clear communication and legal documentation to protect both parties.

Step-by-Step Vessel Takeover Process

1. Buyer Issues ICPO

   The buyer submits an Irrevocable Corporate Purchase Order (ICPO) along with company registration documents to initiate the process.

   
   

2. Seller Issues Takeover of Contract MOU

   The seller sends a Memorandum of Understanding (MOU) for contract takeover. The buyer signs and returns this MOU with an official acceptance letter.

   
   

3. Seller Legalizes MOU and Releases Documents

   Within 48 hours, the seller legalizes the MOU and provides the buyer with Proof of Product (PPOP) and shipping documents, including:

   • Bill of Lading

   • Vessel tanker details and cargo manifest

   • Product passport (analysis test report)

   • 3% payment invoice

   
   

4. Buyer Verifies and Makes Partial Payment

   The buyer verifies product availability and vessel positioning by contacting the vessel master or shipping company. Within 48 hours, the buyer makes a 3% partial payment of the on-board product value via T/T-MT103 to the seller’s fiduciary bank. This payment acts as a security deposit and is deducted from the total product value.

   
   

5. Seller Issues Transfer of Ownership Documents

   After confirming payment, the seller issues the Act of Transfer or Change of Ownership documents, loading port SGS test report, and product export approval certificate.

   
   

Payment Terms and Contract Conditions

• Payment is typically made via T/T or MT103.

• Contract terms include liftable quantity agreements and follow-up contracts after successful lifting.

• Commission structure is split 50% on the buyer side (open) and 50% on the seller side (closed).

  
  

Tanker vessel navigating open waters

Practical Tips for Buyers and Sellers

For Buyers

• Verify Seller Credentials: Always check company registration and legal documents before issuing ICPO.

• Confirm Vessel Position: Contact the vessel master or shipping company directly to confirm the tanker’s location and cargo status.

• Review All Documents Carefully: Ensure PPOP and shipping documents are authentic and complete.

• Prepare for Partial Payment: The 3% partial payment is mandatory and acts as a commitment to the transaction.

• Sign NCNDA/IMFPA: Non-Circumvention, Non-Disclosure, and Irrevocable Master Fee Protection Agreements protect all parties involved.

  
  

Common Challenges and How to Avoid Them

• Delayed Vessel Rerouting: Plan logistics early and confirm vessel availability to prevent delays.

• Disputes Over Product Quality: Use third-party SGS testing and provide detailed product passports.

• Payment Issues: Use secure banking channels and insist on official payment confirmations.

• Contract Misunderstandings: Clarify all terms in the MOU and contract documents before proceeding.

  
  

Fuel storage tanks at port facility

Final Thoughts on FOB Fuel Products and Vessel Takeover

Navigating FOB fuel products and vessel takeover requires clear procedures, verified documentation, and strong communication between buyers and sellers. Understanding the step-by-step process helps avoid common pitfalls and ensures transactions proceed smoothly. Buyers should focus on verifying product availability and vessel status, while sellers must provide timely, accurate documents and maintain transparency.