How an EN590 diesel deal works

1. Buyer's request (LOI or ICPO). The buyer issues a Letter of Intent or an Irrevocable Corporate Purchase Order on company letterhead: product, specification, quantity, destination port, Incoterms, payment instrument and validity.
2. Seller's offer (FCO or SCO). The seller replies with a Full or Soft Corporate Offer: product, origin, quantity, loading port, price basis, procedure and validity.
3. Protection of intermediaries (NCNDA and IMFPA). Before contacts are exchanged, buyer, seller and all intermediaries sign NCNDA and IMFPA.
4. Contract (SPA). The parties negotiate and sign the Sale and Purchase Agreement: specification, quantity and tolerance, delivery terms, inspection, payment, penalties and dispute resolution.
5. Payment instrument. The buyer's bank issues the agreed instrument, for example a documentary letter of credit (DLC, MT700) or a standby letter of credit (SBLC, MT760). The seller may provide a performance bond.
6. Inspection and loading. An independent inspector such as SGS, Intertek or Bureau Veritas checks quality and quantity at loading. The seller provides the shipping documents: bill of lading, certificates of quality, quantity and origin.
7. Payment and commission. Payment is made against documents under the agreed instrument. Intermediary commissions are paid as fixed in the IMFPA.

Under FOB terms the buyer arranges the vessel and often inspects the product before loading. Under CIF the seller arranges the vessel, freight and insurance to the destination port. FOB vs CIF explained.

NCNDA (Non-Circumvention, Non-Disclosure Agreement) is signed by all parties in the deal chain. It forbids contacting each other's buyers, sellers or banks directly without the introducing party, and forbids disclosing contacts and terms to third parties.

IMFPA (Irrevocable Master Fee Protection Agreement) fixes who receives a commission, how much (usually per barrel or per metric ton) and how it is paid, typically by the paying bank at the same time as the cargo payment.

At AlArtFuel both documents are signed before the buyer and the seller are introduced. That is why listings on our board are published without contacts: interested parties come through the broker, and every intermediary's fee is protected.

FOB (Free On Board): the seller loads the product onto the buyer's vessel at the loading port. The buyer arranges and pays for the vessel, freight and insurance, and the risk passes to the buyer once the product is on board.

CIF (Cost, Insurance and Freight): the seller arranges the vessel and pays freight and minimum insurance to the destination port. The risk still passes to the buyer at loading, but the seller handles the logistics.

FOB suits buyers with their own chartering capacity and gives more control over inspection at loading. CIF is simpler for buyers without shipping experience. Price, procedure and inspection rights differ between the two, so always check which Incoterms an offer is based on.

• Requests for upfront fees, “registration” or “document” payments before a contract is signed.
• Very large monthly volumes at a deep discount to market prices with no verifiable seller.
• Refusal of independent inspection or of any proof of product before payment.
• Company names, addresses or signatures that differ between the FCO, POP and other documents.
• Demands for proof of funds or bank details before any written offer.
• Procedures that require the buyer to pay before the product is inspected or loaded.
• Pressure to decide within hours and refusal of standard NCNDA/IMFPA.

We check company details and documents before introducing parties, but every buyer and seller should also run their own due diligence and use bank instruments rather than direct transfers.