PRICES, TYPE OF SPA/CONTRACT, DISCOUNTS, METOD OF PAYMENT, FINANCIAL INSTRUMENTS, COMMSSION
1.PRICES
The crude oil/petroleum products usually are sold in barrels.
The minimum amounts of barrels most sellers are willing to supply are usually 2 to 4 millions of barrels monthly.
We prefer :
# Formula based pricing linked on PLATTS’S quotes around loading dates LESS an agreed discount.
Following links for pricing information are considered by most of suppliers/title holders to be the closest estimate of their invoicing prices.
The invoiced prices are typically based on the three-day average (the day upon loading, preceding day and the following). Supplier uses the actual price on the basis of NWE PLATT’S MINUS discount,
all prices for the End Buyer are according to Platt's European Marketscan MINUS discount.
# Formula pricing set by OPEC , LESS an agreed discount.
# Fixed price offerings in US$/MT or US$/bbl which is usually offered for the first 12 months contract period and subject to review on yearly basis, according to buyer demands.
2.TYPE OF SPA/CONTRACT
We are working with LONG TERM SPOT SPA/CONTRACT FOR 12 MONTHS/ONE YEAR
PERIOD with roll extension for five years or more only.
3.DISCOUNTS
The amount of the discount is not fixed, but varies according to:
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Type of the product (e.g., Crude oil, Gasoline/D2, Mazut, JP-54, etc.)
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Delivery term, FOB, CIF.
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Means of the payment that can be also reflected in additional discount
Supplier can offer to End Buyer a very competitive discounts from PLATT’S pricing.
4.METHOD OF PAYMENT FOR PETROLEUM PRODUCTS.
Usually Irrevocable Letter of Credit may be used for payment, through swift, or wire transfer.
This can either be done through bank to bank by means of MT799.
5.BANK INSTRUMENT
Confirmed Irrevocable Documentary Letter of Credit (DLC), SWIFT MT 700 ONLY,
according to: UCP 600
The End Buyer issues a DLC to supplier and if all conditions are met the supplier can obtain collection of funds.
In other words the bank is saying to the supplier “we don’t care what the end buyer says, you the supplier have met the condition of the DLC, we the bank will guarantee payment for the goods ordered”.
Instead of arranging a new L/C for each separate shipment, the buyer establishes a L/C that revolves either in value (a fixed amount is available which is replenished when exhausted) or in time (an amount is available in fixed installments over a period such as week, month, or year). CIRDLC in time are of two types:
# in the cumulative type, the sum unutilized in a period is carried over to be utilized in the next period;
# whereas in the non-cumulative type, it is not carried over.
SWIFT (Society for Worldwide Interbank Financial Telecommunication), MT (Message Type) 760 the
numbers indicates the standardized message formats which comprise the SWIFT, messaging system,
CIRDLC, just in case.
These types of payment are internal bank applications for transferring money.
Buyer and Supplier can use such applications.
When a bank issues an MT 760 it practically issues a payment guarantee, on behalf of a customer, typically having first blocked the same amount of funds in the customer's account.
For more detail click here…si conecteaza la BANK INSTRUMENTS
6.COMMSSION
Commission for the FACILITATOR/PRIMARY AGENT always paid by the SUPPLIER, stipulated in SPA/CONTRACT, according to IPG, signed by the SUPPLIER and END BUYER along with SPA/CONTRACT.