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ENERGY TRADE KNOWLEDGE / DELIVERY TERMS

Trade terms,
decoded.

A practical guide to CIF, FOB and common petroleum-transfer labels. Understand where cargo moves, where risk may change and what must be written into the contract.

TERM GLOSSARY ↓
TERM GLOSSARY

Five terms buyers ask about most

CIFINCOTERMS® 2020

Cost, Insurance and Freight

PHYSICAL MOVEMENT
Seller loads cargo on the vessel and arranges port-to-port carriage to the named destination port.
KEY POINT
Seller pays carriage and minimum insurance, but risk transfers to the buyer once cargo is on board at the shipment port.
BUYER SHOULD VERIFY
Named shipment and destination ports, insurance scope, vessel, inspection and document set.
FOBINCOTERMS® 2020

Free On Board

PHYSICAL MOVEMENT
Seller delivers cargo on board the buyer-nominated vessel at the named shipment port.
KEY POINT
Risk transfers when cargo is on board. The buyer generally arranges the main carriage and insurance.
BUYER SHOULD VERIFY
Named shipment port, vessel nomination, loading window, inspection and allocation of loading costs.
TTTOPERATIONAL LABEL

Tank-to-Tank

PHYSICAL MOVEMENT
Physical product moves from a sending storage tank to a receiving tank, commonly within one terminal or connected facilities.
KEY POINT
It describes an operational transfer, not a standard allocation of cost or risk.
BUYER SHOULD VERIFY
Terminal confirmation, tank numbers, valid storage rights, recent Q&Q, transfer line and custody-transfer documents.
TTOOPERATIONAL LABEL

Tank Take Over / Title Takeover

PHYSICAL MOVEMENT
Often used for taking over product already stored in a tank, a tank lease, or title to an existing inventory position.
KEY POINT
Usage is not standardised. The acronym can mean different things in different offers, so the contract must spell it out.
BUYER SHOULD VERIFY
Terminal verifies the inventory, seller authority, tank lease, title documents, inspection status and effective takeover time.
VTTOPERATIONAL LABEL

Vessel-to-Tank

PHYSICAL MOVEMENT
Product is discharged from a tanker vessel into an onshore terminal tank or another agreed receiving storage asset.
KEY POINT
It describes the discharge route; it does not by itself define price, risk, title or payment timing.
BUYER SHOULD VERIFY
Vessel identity, berth and terminal acceptance, receiving tank, ullage/outturn method, independent Q&Q and title-transfer point.
CIF vs FOB

Cost route and risk route
are not the same.

Under both maritime rules, risk normally transfers when the goods are on board at the shipment port. CIF additionally requires the seller to arrange and pay for carriage and minimum insurance to the named destination port.

CIF
RISK TRANSFERS ON BOARD
SELLERSHIPMENT PORTDESTINATION PORTBUYER

Seller arranges carriage + minimum insurance

FOB
RISK TRANSFERS ON BOARD
SELLERSHIPMENT PORTDESTINATION PORTBUYER

Buyer arranges main carriage and insurance

PETROLEUM TRANSFER MODES

Follow the product, not the acronym

Operational abbreviations vary between traders and terminals. The contract should name the sending asset, receiving asset, terminal, inspection point, title-transfer point and responsible operator.

TTT
SELLER TANK
→
BUYER TANK
TTO
EXISTING INVENTORY
→
BUYER CONTROL / TITLE
VTT
TANKER VESSEL
→
TERMINAL TANK
VERIFICATION CHECKLIST

Before funds move,
verify the physical chain.

Educational summary only. The executed SPA, terminal agreement, applicable law and official Incoterms® rules control each transaction.

  1. 01

    Verify the counterparty, mandate and authority to sell.

  2. 02

    Confirm the terminal, vessel or tank directly with the responsible operator.

  3. 03

    Match recent quantity-and-quality reports to the named physical asset.

  4. 04

    Write the delivery point, risk point, title point and payment trigger into the SPA.

  5. 05

    Reject unexplained fees or deposits that cannot be independently verified.

AUTHORITATIVE REFERENCES

Educational summary only. The executed SPA, terminal agreement, applicable law and official Incoterms® rules control each transaction.

ICC Academy — CIF under Incoterms® 2020 ↗ICC Academy — FOB under Incoterms® 2020 ↗Petroleum product transfer operations ↗
JINFENG / DELIVERY SUPPORT金拓能源，丰通四海。
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