Common glossary for oil transaction.
Not officially an incoterm, but is commonly used in seller’s quotes as, e.g. “CIF ASWP“, and is widely accepted. CIF ASWP in a quote implies that CIF shipment would cost the same for delivery to any safe port in the world, whatever the distance from source. If this term is used in a quote the buyer should get clarification. A vessel chartered to Cotonou, or Ghana costs a lot less than a vessel chartered to China. This is a critical price consideration and usually indicates an over-generalization on the seller’s part. This term may also be a clue to a buyer that they may be able to get a better price if their POD is close to the country of origin.
ATB means Authority To Board. Used for oil shipments – This is usually a SATCOM message issued by the ship captain, it provides the authority to enable the buyer to board the vessel to confirm cargo availability, quantity and quality. It is usually given to a supercargo team and inspector to do a dip test. You can not board a cargo or oil vessel without this permission.
BCL means a Bank Comfort Letter. Also known as a Bank Capability Letter, or Bank Confirmation Letter, this is a letter from the buyer’s bank, sent through the SWIFT system indicating the buyer’s capability to purchase by confirming that there are funds available to make that financial obligation. It is not guarantee of payment and can not be drawn upon by the seller’s bank. Therefore it is not an actionable banking instrument and is used in the oil business only as a proof of funds.
BG means a Bank Guarantee. A banking instrument sent through the SWIFT system indication that there are a funds that are set aside (blocked) to make a purchase. A BG is stronger than a bank comfort letter but is still not an actionable banking instrument, meaning it can not be drawn upon by the Seller’s bank. it is strong enough to get a vessel loaded but not usually strong enough to warrant the seller’s bank to issue a performance bond. It can and is usually used as a place holder until there is a final determination of the cargo via a Q&Q test and the delivery documents are presented at the seller’s bank for payment. Then it is common that payment is made by a standard wire transfer, an MT103.
Letter of Intent – A letter of Intent is supposed to inform a supplier of the intent of the buyer, that the buyer really wants to purchase. A letter of Intent is a non binding document issued by the buyer. Often a seller will hope to secure the sale with a letter of intent.
Non Circumvention Non Disclosure = The purpose of this document is to protect the agent who wishes to earn a commission for connecting the Buyer and Supplier.
SPA: Sales And Purchase Agreement
Irrevocable Corporate Purchase Order(ICPO), Is a document similar to a letter of intent (LOI) used by companies to communicate their intent to enter into a transaction with a foreign-based company and provide verification of purchasing terms, banking information, and company financials.
IMFPA: Irrevocable Master Fees Protection Agreement.
TTT: Tanker To Tank
TTO: Tanker Take Over
FOB: Freight On Board".
POP : Proof Of Product
ATS: Authority To Sell
CIF" Cost, Insurance and Freight - CIF'
ICC: International Chamber Of Commerce
POF: Proof Of Fund
SBLC: Standby Letter of Credit
PB: Performance Bond
BLCO: Bonny Light Crude Oil
DLC: Documentary Letter of Credit
RWA: Ready, Willing and Able to issue to them a 2% Performance Bond