How physical fuel deals actually work: FOB, CIF, TTO/TTT, inspection, POP and POF

Most fraud in fuel trading hides inside the "procedure": the order in which documents, inspections and money move. If you know what a normal procedure looks like, abnormal ones stand out quickly. This explainer is based on Incoterms® 2020 (ICC), public warnings from terminals, inspectors and national oil companies, and the info2fuel procedures library.

1. FOB, CFR, CIF and DAP: who pays, and where risk passes

• FOB (Free On Board), named load port: the seller delivers when product passes into the buyer's nominated vessel. Buyer arranges and pays freight and insurance. Risk passes at loading.
• CFR (Cost and Freight), named destination: seller pays freight; buyer insures. Risk still passes at loading.
• CIF (Cost, Insurance and Freight), named destination: seller pays freight and minimum insurance. Risk passes at loading, not on arrival, which surprises many first-time buyers.
• DAP / DPU (Delivered At Place / Delivered at Place Unloaded): seller carries risk to the named destination. Common for delivered cargoes into a named terminal.
• US domestic: most volume moves by rack (truck loading at a terminal), pipeline or barge, priced off NYMEX or OPIS/Platts plus or minus a differential.

Red flags: withdrawn terms such as DES or DDU (dropped from Incoterms in 2010), and "CIF ASWP" (any safe world port). Real offers name a port or a port range and a laycan (the loading window).

2. Delivery methods: TTV, TTT, TTO, STS

• TTV (tank to vessel): product loads from the seller's shore tank into the buyer's ship. Normal for terminal-based FOB sales.
• TTT (tank to tank): product is pumped from the seller's tank into the buyer's leased tank. It happens between genuine terminal customers, but "Rotterdam/Houston/Fujairah TTT, dip test, then pay" is the signature storage-spoofing scam.
• TTO (tank take-over / in-tank title transfer): product stays put and the terminal records the change of owner. Only the terminal can confirm this. A seller-signed "tank take-over deed" proves nothing.
• STS / VTV (ship to ship): common and legitimate, but also a known method of disguising sanctioned origin. Check vessel history.

3. TTO/TTT: the risks in detail

In the typical tank-storage scam, the buyer receives a "tank storage receipt" (TSR), an old inspection certificate and a "dip test authorization" (DTA/ATV), then is asked to pay storage days, injection costs, a DTA "endorsement" or a tank lease before the dip test. The product, the tank or the seller's relationship with the terminal doesn't exist, and the money is gone. The Port of Rotterdam's Storage Spoofing task force (storagespoofing.nl) says any agreement requiring payment for ATV/DTA is wrong by definition.

• Get the terminal's phone number from the terminal's own official website, never from the seller's documents or email signature.
• Ask the terminal whether the document is theirs and how inspections are scheduled. Terminals rarely confirm customer data, but they will often say "that's not our document".
• Know what the terminal stores. Some well-known terminals publicly state they don't store EN590 or jet fuel at all.
• Never pay any fee to "access" a tank, test product or register a contract.

4. Inspection (SGS, Intertek, Saybolt, AmSpec, Bureau Veritas)

• Quantity and quality (Q&Q) are measured by an independent inspector, producing a Certificate of Quantity and a Certificate of Quality.
• In FOB and CIF trades, load-port Q&Q is normally final and binding unless the contract says otherwise.
• The buyer appoints and pays its own inspector directly. The titleholder asks the terminal to schedule access. Nobody else should be paid for this.
• Inspection certificates are often forged or recycled. Verify a certificate with the inspection company directly (SGS and Intertek both offer certificate verification), and treat old dates or identical results across cargoes as red flags.

5. Proof of product (POP) and proof of funds (POF)

• Genuine POP is something a third party issued and you can verify independently: terminal confirmation that the seller holds stock, a refinery commitment on the refiner's own channels, a vessel nomination with Q88 and loading schedule, or a draft bill of lading.
• Genuine POF is usually the buyer's bank being able to issue a documentary letter of credit (DLC, MT700) or a standby letter of credit (SBLC) at the right stage, not a screenshot of a bank statement.
• Sequence matters. Neither side should hand over sensitive banking or identity documents to an unverified counterparty. "POP only after you issue an MT760" or "pay first, POP later" are warning signs.
• Never send passports, bank statements or company documents to parties you haven't verified; scammers reuse them to dress up other frauds.

6. A normal document flow

1. Enquiry: LOI or ICPO from the buyer, or an offer (SCO/FCO) from the seller.
2. Verification: company registry, domain, sanctions screening of parties, owners and vessels; price checked against a benchmark.
3. Negotiation and a written deal recap (price basis, quantity, laycan, Incoterm, inspection, payment).
4. SPA (sale and purchase agreement), often on the seller's general terms and conditions.
5. Payment instrument issued (DLC MT700, SBLC, or open account for established relationships).
6. Vessel nomination, loading, independent load-port Q&Q.
7. Documents presented (B/L, CoQ, CoO, invoice, insurance under CIF) and payment against compliant documents.
8. Intermediary fees, if any, paid by the party that agreed to pay them, from a completed and paid delivery (see the IMFPA explainer).

The info2fuel procedures library: two reference procedures

CIF with documentary letter of credit (normal structure): buyer issues ICPO/LOI; fee protection signed by the paying party; seller issues SCO/FCO; draft SPA exchanged and signed; buyer's bank issues a DLC (MT700); seller provides POP (vessel Q88, loading schedule, refinery commitment); independent inspection at the load port and bill of lading issued; documents presented to the buyer's bank; bank pays against compliant documents.

FOB tank-to-tank (high-risk structure, shown so you can recognise it): ICPO, SCO, draft SPA, then a "POP" consisting of a tank storage receipt and a dip-test authorization, a tank storage or injection agreement signed by the buyer, a dip test in the seller's tank, injection into the buyer's tank, and payment by MT103 within a short window. Every genuine version of this requires the terminal itself to confirm stock and title. If anyone asks you to pay for tank access, storage, injection or a dip test up front, stop.

Where to report fraud

• United States: FBI IC3 (ic3.gov) and the FTC (ReportFraud.ftc.gov).
• Fake Rotterdam terminal websites: storagespoofing.nl.
• The impersonated company's own fraud or security contact (terminal operators, refiners and national oil companies publish these).