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Standard Operating Procedures

FOR LPG SHIPMENTS VIA SEA

Standard Operating Procedure for FOB / CFR / CIF

This Standard Operating Procedure (SOP) outlines the step-by-step process for conducting FOB/ CFR/ CIF transactions involving goods/ products (commodities, oil & gas, refined petroleum products including Liquified Petroleum Gas etc) at the loading port ensuring a structured and transparent approach to the transaction.

1. Buyer Initiates the Process:

a. The Buyer initiates the process by sending an

i. Irrevocable Corporate Purchase Order (ICPO) along with a 

ii. POF or Ready, Willing and Able by (RWA) MT999/199/799.

2. Signing the Sales and Purchase Agreement (SPA):

a. Both the "BUYER" and “SELLER” enter into a formal Sales and Purchase Agreement (SPA) and mutually agree to its terms and conditions.

3. Draft Letter of Credit:

a. The “SELLER” provides the Buyer with a draft letter of credit, which may include a Financial Bank Guarantee (BG) or Standby Letter of Credit (SBLC).

4. MT799 Pre-Advice from Buyer’s Bank:

a. The Buyer's bank sends an MT799 pre-advice to the Seller's Bank / FIDUCIARY Bank to confirm their financial capacity and commitment

5. Operative Letter of Credit (BG/SBLC):

a. The Buyer opens an operative Stand by Letter of Credit (BG/SBLC) in favour of the Seller.

6. Performance Bank Guarantee:

a. Within 10 banking days of the operative Stand by Letter of Credit, the Buyer receives a 2% Performance Bank Guarantee for contract shipments

7. Exporting Goods/ Products from the loading port:

a. Approximately 30 to 45 days after confirming the Buyer's bank instrument, the “SELLER” arranges the delivery of goods/ products at the loading port.

8. Pre-Shipment Inspection:

a. The “SELLER” instructs an international pre-shipment inspection agency, such as ALEX STEWART or SGS, to conduct an inspection and testing of the goods/ products. Upon receiving results confirming the quality as specified in SPA, the inspection report is shared.

9. Shipping Documents:

a. The “SELLER” provides the “BUYER” with a complete set of original shipping documents for payment negotiations through BG/SBLC. These documents include:

i. Pro-forma Invoice.

ii. Certificate of Origin issued by the Competent Authority of the country of origin.

iii. Packing list indicating Gross Net weight and markings on each bundle, where applicable.


iv. Insurance Cover Certificate & Insurance Policy (in case of CFR transaction arranged by Buyer).


v. Pre-Inspection certificate of Quality and Quantity issued by a third-party inspection companies (e.g. Alex Stewart, or SGS) indicating the weight and Quality of goods/ products.


vi. Bill of lading, and


vii. the Seller's Final Commercial Invoice.

10. Final Payment:

a. The Buyer is responsible for making within 72 hours via the final payment swift MT103 to the Seller’s designated bank account.

b. Upon receipt of the final payment, the Seller transfers the ownership of the goods/ products to the Buyer.

i. The final invoice shall be based on the contracted price as per the SPA in force at the time that the Safekeeping Receipts (SKR) are issued.

11. Note:

a. Understanding SBLC & SKR

b. Upon receipt of the final payment, the Seller transfers the ownership of the goods/ products to the Buyer.

i. Standby Letters of Credit (SBLCs) A Standby Letter of Credit (SBLC) is a financial guarantee issued by a bank or financial institution on behalf of its client, promising to pay a specified amount to a beneficiary upon the occurrence of a predetermined event or default by the client. SBLCs are commonly used in international trade to assure the seller that payment will be made by the buyer. These instruments can also be monetised, enabling the holder to access funds for various financial purposes.

ii. Safekeeping Receipts (SKRs) A Safekeeping Receipt (SKR) is a document issued by a financial institution confirming the safekeeping of a specific asset or high-value item, such as precious metals, artwork, merchandise or other high-value items. SKRs can be used as collateral or proof of ownership for monetisation and loan purposes.