International fuel cargoes are bought and sold on standard delivery terms published by the International Chamber of Commerce, known as Incoterms. They define who pays for freight and insurance, and at what point risk transfers from seller to buyer.
FOB — Free on Board
The seller delivers the product onto the vessel at the load port. From that point the buyer bears the cost of freight and insurance, and the risk of loss. FOB suits buyers who charter their own vessels or have strong freight arrangements.
CFR — Cost and Freight
The seller pays freight to the destination port, but risk passes to the buyer once the cargo is loaded. The buyer arranges insurance.
CIF — Cost, Insurance and Freight
As CFR, but the seller also arranges minimum cargo insurance. Risk still passes at loading. CIF is common for cargoes sold into African ports.
DAP — Delivered at Place
The seller bears cost and risk until the product is made available at an agreed destination, ready for unloading. DAP shifts more responsibility to the seller and is common for regional and inland deliveries.
Quantity and quality
Whatever the Incoterm, contracts should specify how quantity and quality are measured — typically by an independent inspector at load or discharge — and what tolerances apply.
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Published by African Energy Enterprises. This article is general information and does not constitute legal, tax or financial advice. Regulated prices and rules change; confirm current figures with the relevant authority.
