Welcome to the world of trading petroleum products, where not only words but also abbreviations, technical terms and short forms are the language of business. When conducting business and creating documents in this industry, technical terms and abbreviations often occur that can confuse even experienced professionals. For this reason, we have compiled this glossary of terms and abbreviations to provide you with a reliable source for explaining the meanings and using key terms in the trade of petroleum products. Whether you're a newbie in the field or a seasoned professional, this glossary will help you navigate the world of oil trading more confidently and conduct business negotiations successfully. Let's dive into the terminology together that will be a reliable companion in your work!
 

LOI – Letter of Intent

Declaration of intent. A letter of intent is intended to inform the supplier of the buyer's intentions that the buyer actually wants to buy. A letter of intent is a voluntary document issued by the buyer that does not oblige the buyer to make a purchase in the future, but merely states its intentions.

ICPO – Irrevocable Corporate Purchase Order

Irrevocable company order. This document is similar to a letter of intent (LOI) and is used by companies to express their intention to do business with a foreign company and to confirm the terms of purchase, bank details, and company finances.

Spot

The term "spot business" literally means "on site." In the case of transactions with petroleum products, it refers to one-off transactions without long-term obligations.

Trial

A term from the field of negotiation and document preparation that refers to a trial (first) delivery within the framework of a long-term supply contract.

NCND – Non Circumvention Non Disclosure

Confidentiality Obligation. The purpose of this document is to protect the intermediary who wants to receive a commission for the mediation between buyer and supplier.

SPA – Sales And Purchase Agreement

Purchase contract for a resource. Supply contract.

IMFPA – Irrevocable Master Fees Protection Agreement.

The IMFPA helps to ensure fair compensation for intermediaries for their role in facilitating transactions and provides a clear and binding agreement that governs the payment of commissions.

FOB – Freight On Board

Delivery base – cargo on board, according to Incoterms. The FOB conditions stipulate that the seller is obliged to transport the goods to the port and load them onto the vessel specified by the buyer; the costs of transporting the goods on board the ship are borne by the seller. In some ports, for deliveries on FOB terms, the buyer bears the cost of loading. The risk of accidental loss or damage to the goods is borne by the seller until the time the goods go overboard and the buyer from this point on.

CIF – Cost, Insurance and Freight

Delivery base – cost, insurance and freight according to Incoterms. International terms and conditions of trade that designate the price of the goods and provide for the payment by the seller of the costs of loading the goods onto the ship, transporting and insuring them to the place of destination.

ICC – International Chamber Of Commerce

International Chamber of Commerce – an independent, self-governing, non-profit international organization founded in 1919 that brings together chambers of commerce, business associations, and individual companies to develop international trade standards, represent common interests in international organizations, and resolve trade disputes.

ATS – Authority To Sell

Power of attorney that a refinery grants to its customer. In practice, this document is usually issued by an intermediary as proof that the refinery has allowed him to resell the resource.

POP – Proof Of Product

Product Proof. This is a document required in the oil trade, which documents the existence of a product. POP is crucial from the buyer's point of view, but an important point in confirming the product to the buyer is that it must undergo independent verification, which means that there must be a third party (a person or organization other than the buyer or seller) that provides documents that prove or confirm the existence of the product.

PPR – Partial Proof of Product

Partial product proof. Incomplete, partial document package for a good (resource).

TTT – Tanker To Tank

FOB Trading Procedure – Tanker to Tank. Trading procedure in which a resource is sold within a port by pumping it from the seller's tank (oil storage) to the buyer's tank (oil storage).

TTO – Tanker Take Over

FOB transaction procedure – tankers take over. Transaction procedure in which the seller sells his resource together with the oil storage, i.e. assigns the rental of his tanker (oil storage).

DIP & PAY

FOB transaction procedure, in which the supplier first gives the buyer the right to come to the seller's oil warehouse, take samples of goods, and immediately make direct payment after confirming the quality and quantity.

VTO – VESSEL TAKE OVER

Transaction procedure in which the supplier sells the resource on the open sea together with the vessel. After taking over the vessel on the open sea, the buyer usually pays the freight costs for the vessel to its port of destination.

TTV – Tanker To Vessel

FOB trading procedure in which the supplier pumps the supply from its land tank farm into the buyer's vessel. In fact, this is the classic FOB procedure according to Incoterms.

ASWP

Officially not an Incoterm, it is often used in the seller's listings, such as "CIF ASWP", and is widely used. CIF ASWP in one quote means that CIF delivery will cost the same for delivery to any safe port in the world, regardless of the distance to the source.

ATB – Authority To Board

Authority to board. Used for shipping oil and oil products. It is usually a SATCOM message issued by the captain of the vessel that gives the buyer the right to board the vessel to check the availability, quantity and quality of the cargo. Usually, this is assigned to the supercargo crew and the inspector to conduct a diving exam. You are not allowed to board a cargo or oil tanker without this permit.

SATCOM

Satcom – a series of communications satellites developed and operated by the American company RCA American Communications. Used by ship captains for communication and messaging.

Q&Q

Product analysis report. Form for laboratory tests.

ATSC – Authorization to Sell & Collect

Authorization to sell and collect. The document is usually issued by an intermediary as proof that the refinery has allowed him to resell the resource.

Q88 – Vessel

Ship data (ship ID). Complete and detailed information about the ship with all technical details, technical ID of the ship.

NOR – Notice of Readiness

Notification of the readiness of the oil depot or the buyer's vessel for refueling with the full coordinates of the oil depot.

ETA – Estimated time of arrival

Estimated time of arrival of the vessel (cargo) at the destination.

SGS Message

Swiss company that provides services in the areas of independent assessment, control, testing and certification. SGS's portfolio of services includes inspection and verification of the quantity, weight and quality of goods, testing of products for various safety and quality characteristics, certification of products, management systems and services for compliance with standards set by states, standards bodies or customers of SGS, as well as services to verify the conformity of products and services with international standards. or national legislation.

TSA – Tank Storage Agreement

Agreement on the storage of tanks. Contract with an oil terminal for storage.

TSR – Tank Storage Receipt

Receipt for storage in a tank. In fact, it is a receipt for the payment of a land tank farm with all the details of the warehouse and a permit for use. Issued along with the TSA as a permit to put a specific fuel into a specific tank.

DIP-Test – DTA – Dip Test Authorization

Access of the buyer's representative to the supplier's tank to take samples and check the availability, quantity and quality of the fuel.

UDTA – Unconditional Dip Test Authorization

Unconditional permission to carry out a diving test. Access of a representative of the buyer to the supplier's tank to take samples and check the availability, quantity and quality of the fuel, without imposing conditions or payments that prevent the customer from testing the fuel and obtaining a product confirmation before being obliged to pay for the fuel.

CIS – COMPANY INFORMATION SHEET

Complete information about the contractor (company) with incorporation information, bank details, copies of incorporation documents and copies of the signatories' passports.

ATV – Authorisation to verify

Authorization to inspect an oil storage facility or vessel. Access of a representative of the customer to the vessel or the oil depot to check the availability of fuel.

CPA – Charter Party Contract

Contract for the chartering of a vessel with a shipping company

TTTIA – Tank-to-Tank-Injection-Agreement

Agreement between the Buyer's tank farm and the Seller's tank farm for tank-to-tank filling. Applies to FOB (in-port sales) transactions.

FCO – FULL CORPORATE OFFER

COMPLETE COMPANY OFFER from the supplier to the customer. Irrevocable offer from the supplier, i.e. the supplier undertakes to deliver the goods under the conditions specified in the offer. The Supplier is not entitled to change any of the conditions. The offer usually has a certain period of validity.

SCO – Soft Corporate Offer

Supplier's soft enterprise offer. In order to start negotiations in international trade, the parties exchange documents that define the subject matter and conditions of the negotiations. If the seller is the first to make an offer, they will send an SCO.

R&E – Contract with Rolls & Extension’s

Long-term export contract between buyer and seller. The same as SPA, only for a longer period of time.

JVA – Joint Venture Agreement

Agreement on a joint activity or agreement on the joint management of a business and the establishment of a joint virtual company. In most countries, commissions from intermediaries are not allowed to exceed a certain amount. In practice, for high commissions in stores, this contract format is used instead of a commission contract.

IPA – INJECTION PROGRAMMING AGREEMENT

AGREEMENT ON THE PROGRAMMING OF THE INJECTION. In fact, this is a document in which the buyer and seller agree on specific dates (schedule) for the injection of the resource into the buyer's oil storage.

P.A.S CODE – Port Authority Security

Abbreviation for "Port Authority Security" and "CODE" for "code" or "identification code". So, it can be assumed that "P.A.S CODE" refers to the security code required to access documents or information about the oil storage facilities in the port.

TITLE TRANSFER AFFIDAVIT

TITLE TRANSFER AFFIDAVIT is a notarized legal document presented by the seller of a property that confirms the status and certain facts about the property, including the right of ownership and the existence of any legal issues. The certificate of ownership serves to protect the buyer.

CI – INVOICE

Invoice

INJECTION REPORT

INJECTION REPORT. Usually presented by the seller to prove that the supplier has previously pumped resources into their oil storage.

MOU – MEMORANDUM OF UNDERSTANDING

MUTUAL UNDERSTANDING. This is a type of agreement between two or more parties that expresses the approximation of the parties' expressions of intent and sets out the likely joint course of action. In the case of transactions in petroleum products, it is an additional document under the ICPO, which is rarely used and is mainly used to record the course of the transaction in a separate document.

TTVIAC – Tank to Vessel Injection Agreement Contract

Contract on the agreement to feed from the tank into the vessel. This is a document in which the buyer and seller agree on the injection from the seller's land resource in the port into the vessel chartered by the buyer.

EL – Endorsement Letter

Confirmation letter. This document format is usually used in petroleum product transactions when the supplier requires additional confirmation from the customer's contractor about the readiness to conclude the transaction. For example, the supplier may request this letter from the customer's terminal to confirm the readiness of the terminal to complete the deal.

DD – Due diligence

Legal review. Term for the process of verifying the contractual partner and his documents.

Terms and abbreviations used to describe bank and payment documents:

BCL – Bank Comfort Letter

Comfort letter from the bank. Also known as a "bankability letter" or "bank confirmation letter", this is a letter from the buyer's bank, sent through the SWIFT system, confirming the buyer's purchasing power by confirming the existence of the funds to meet this financial obligation. It is not a payment guarantee and cannot be used by the seller's bank. Therefore, it is not an effective banking instrument and is only used in the oil industry as proof of the presence of funds.

BG – Bank Guarantee

Bank guarantee. A banking instrument sent through the SWIFT system that confirms the presence of funds that have been set aside (blocked) for purchase. A BG is stronger than a bank guarantee letter, but it is still not an effective banking instrument, meaning the seller's bank cannot use it. It is strong enough to load a ship, but usually not strong enough to guarantee the seller's bank the issuance of a performance guarantee. It can and usually is used as a filling material until the final determination of the cargo has been made through a Q&Q test and the delivery documents have been submitted to the seller's bank for payment. Payment is then usually made via standard bank transfer, MT103.

POF – Proof Of Fund

Proof of means. This is a letter or document confirming that a natural person, entity or company has sufficient funds (money) to carry out the transaction. A POF is usually issued by a commercial bank or custodian to provide the other party – usually the seller – with assurance or assurance that the person or entity in question has sufficient funds to make the agreed purchase.

SBLC – Standby Letter of Credit

Standby letter of credit. This is a subtype of letter of credit, i.e. the obligation of the bank issuing such a letter of credit to pay a sum of money to the beneficiary in the event that the bank's customer is unable to meet his financial obligations. The mechanism is that, at the request of the customer, the bank freezes funds that remain frozen until the transaction is completed or for a certain set period of time.

DLC – Documentary Letter of Credit

Documentary letter of credit. A letter of credit is the obligation of a bank to pay a certain amount of money to the seller of goods or services if the documents confirming the shipment of the goods or the provision of the contracted services are presented in a timely manner. The documentary letter of credit is one of the most important financing instruments in international trade, as it eliminates a large part of the risks for both the buyer (importer) and the seller (exporter). The documentary letter of credit is a very flexible and convenient payment instrument that enjoys the highest recognition and acceptance worldwide.

RWA – Ready, Willing and Able (SWIFT MT799)

Ready, willing and able. The bank letter "Ready, Willing & Able" (RWA) certifies that the bank or financial institution is willing and able to act on behalf of the customer for the specified financial transaction, that the customer has sufficient funds to the bank to complete the transaction, and that such funds are temporarily reserved specifically for that transaction. In fact, this is a preliminary notification from the bank before issuing a bank guarantee or letter of credit.

PB – Performance Bond

Guarantee for the fulfilment of obligations. A bond (obligation) issued by one of the contracting parties as a guarantee against the non-performance of the obligations set out in the contract by the other party. For example, a supplier can issue a PB commitment for a customer to whom the goods are to be delivered. If the contractor is unable to deliver the goods in accordance with the specifications set out in the contract, the customer is guaranteed compensation for the financial losses incurred due to lost profits. Usually, the bond is issued on the market by the supplier in response to a letter of credit received from the customer, and its amount is usually around 2% of the contract value.

RB – Reference Bank

Bank reference letter in any form.

SWIFT MT103

This is a type/format of SWIFT bank messages used in the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system to send messages about cross-border/international bank transfers between financial institutions for money transfers from customers. In fact, it is a direct monetary payment without any guarantees.

SWIFT MT199

The SWIFT payment system uses different types of messages between banks when carrying out international money transfers. MT 199 is a text message between two banks. This message is written in free form. Essentially, it is an interbank messenger. MT 199 is mainly used in petroleum product transactions to transmit information about the customer's solvency to the supplier.

SWIFT MT760

The format of the SWIFT MT760 bank message is a bank guarantee issued as collateral for the obligations of the customer (buyer) towards the supplier (oil refinery), the legitimacy of which is confirmed by the transmission of a notice via the international SWIFT system from the buyer's bank to the seller's bank.

POP (Proof Of Product). Basic documents for goods in international trade

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