conducting safe and legal transactions.

This document provides a general framework for conducting safe and legal transactions. For further details, legal and financial advice is recommended.

**The Complete Oil Transaction Process (From Start to Finish) for Million Dollar Transactions**

To facilitate a large oil/gas transaction between a seller and a buyer, you need to follow a structured and secure process to avoid financial, legal and operational risks. Below, the complete steps from first contact to delivery and settlement are explained:

Step 1: Initial Contact & LOI**
1. Request for Quote (RFQ)**
- Typically, the **buyer** submits a formal Request for Quote (RFQ) detailing:
- Type of oil/gas (e.g. Brent Crude, LNG).
- Volume required (e.g. 2 million barrels).
- Delivery terms (e.g. FOB Rotterdam, CIF Singapore).
- Contract duration (one-time or long-term).
- **Seller** can also submit an **Initial Offer** with price and terms.

2. Initial Letter of Intent (LOI)**
- The parties sign a non-binding LOI that includes:
- Base price, volume, and delivery period.
- General payment terms.
- KYC requirements.

Step 2: Due Diligence & KYC**
1. KYC and Credit Check**
- The seller and buyer must exchange the following documents:
- Certificate of Incorporation.
- Financial documents (Bank Reference, Financial Statements).
- Export/Import Licenses (Export License, Import Permit).
- Sanctions Screening (Sanctions Screening: OFAC, EU, UN).

2. Non-Disclosure Agreement (NDA)**
- Before detailed negotiations, an NDA is signed to keep information confidential.

Step 3: Negotiation & Term Sheet**
1. Term Sheet**
- A document that specifies the technical and commercial details:
- **Price:** (e.g. based on Dated Brent + Premium).
- **Delivery:** (e.g. FOB, CIF, or Ex-Works).
- **Payment:** (e.g. LC 100% Irrevocable).
- **Inspection:** (inspection company such as SGS or Inspectorate).

2. Bank Guarantees**
- The buyer may need to provide **BG** or **SBLC** to prove financial capacity.

Step 4: Final Agreement (SPA & Legal Compliance)**
1. Sales & Purchase Agreement (SPA)**
- Includes key clauses:
- **Delivery Terms (INCOTERMS 2020).**
- **Penalty Clauses).**
- **Force Majeure).**
- **Dispute Resolution (Arbitration: ICC/LCIA).**

2. Legal Approvals**
- Compliance with OPEC, IEA, and local regulations (such as US DOE or Iranian Ministry of Oil).

Step 5: Payment & Financing**
1. Payment Methods in Large Transactions:**
- **Documentary Credit (LC):**
- The buyer requests an LC from his bank.
- The seller's bank releases the payment after the delivery of the documents (Bill of Lading, Inspection Report).
- **Escrow Account:**
- The funds remain in Escrow until the goods are delivered.
- **Bank Guarantees (SBLC/BG).**

#### **2. Trade Finance**
- Use international banks (e.g. HSBC, Deutsche Bank) for credit lines.

Step 6: Inspection & Logistics**
1. Pre-Shipment Inspection (PSI)**
- Independent inspection company (e.g. SGS) verifies the quality and quantity of the cargo.

2. Logistics coordination**
- **Sea freight:** Use of reliable tankers (VLCC for high volumes).
- **Insurance:** Marine cargo insurance (according to Institute Cargo Clauses).

Step 7: Delivery & Settlement**
1. Shipping Documents**
- **Bill of Lading - B/L).**
- **Certificate of Origin).**
- **Inspection Certificate).**

2. Final Payment**
- The buyer's bank releases the payment after receiving the documents.

Step 8: Post-Deal**
- **Dispute resolution (if any).**
- **Performance review for future transactions.**

Role of the broker/facilitator in this process:**
1. **Coordination between the parties** (buyer, seller, banks, inspectors).
2. **Ensure compliance with all legal procedures.**
3. **Risk management** (monetary, logistical, political).