FAQ’s

Oil refineries require prepayment in full and in cash by wire-transfer. However, the sanctions imposed by the West (US/UK/EU/Canada) make wire-transfers very difficult, because Russian banks have been disconnected from the SWIFT-network and a new network has been established between Russia, China, and approximately 40 other countries, which have nothing to do with SWIFT. Regular bank transfers, which were used prior to February 2022, are no longer possible.

No. First, refineries do not work with end-buyers directly, they use traders, such as our company. Second, Russian law demands that domestic companies will be supplied first, because they take priority over foreign buyers. We are a Russian-registered company, thus a domestic company, which gets priority treatment. Besides, as a locally registered company we also get much lower prices with the railroad authority, the port authorities, tax authorities, etc. Third, refineries don‟t provide logistical support, such as vessel chartering, rail tanker car chartering, quality and quantity inspection, etc. They only provide product EXW, everything else has to be arranged by the buyers.

No. The invoices for goods (petrochemical products) are issued in Russian to Russian entities, such as our company. Payments are expected in Russian Rubles (RUR) and any payment coming from a foreign company would eliminate all advantages relating to prices, taxation, custom duties, and any preferential treatment.
Besides, Russian accounting rules prohibit the payment of an invoice addressed to a domestic company by another company, regardless if the buyer is foreign or domestic. If the bank receives a large amount of money, they will ask for a copy of the invoice on which the payment is based. If the beneficiary of the payment is different from the sender, then the payment is automatically rejected and returned by the bank, which means that we would be unable to affect shipment.

Petrochemical products are obviously bulk liquids. There is no serial number, batch number or any other identifying mark. ICC rules and INCO-terms are very clear on this subject. The “title” for bulk products is provided in form of the bill of lading carrying the product from the refineries‟ railyards to the applicable ports.

There are two types of “titles”:
a) the railway bill of lading, which is issued by the railroad company for the transportation of the petrochemical products from refinery to port. They will only issue such railway bills of lading once payment of the rail transportation costs has been affected, but not before. Since our company gets preferential treatment, the railway company, too, will issue the invoices for the transportation costs to our company and they expect the payment to come from us, too. Upon receipt of payment, the railway bill of lading will be issued to our company, showing us as the “title holder‟, but not before the payment is received. For reasons stated above, the railroad company‟s bank also does not accept payment from any third party on our behalf.
b) the ocean bill of lading, which is issued with the buyer as the consignee by the shipping company once the product has been completely loaded, inspected and released by customs.

We are aware of such „certificates‟, but they are 100% fraudulent. One can get a certificate of title for a car, a house, a yacht or boat, an aircraft, etc., but not a bulk liquid. The only legal “title” for a bulk liquid is the above-mentioned bill of lading of the carrying „vessel‟, be it a rail tanker car, a truck, or a ship.

In response to international sanctions, the Russian government passed laws which demands that payment be made in Russian Rubles (RUR) only.

Yes, you can, but it is a complex and time-consuming process, because prior to any foreign company being allowed to open a bank account in RUR, it must be registered with the tax authorities, which takes 2-3 months, and requires the translation of corporate documents, board resolution minutes, signature cards, etc. into Russian, which must be certified, notarized and apostilled in the country of registration of the foreign entity, and then the tax office will authorize the opening of a bank account.

But please beware of the inability to transfer money via the SWIFT system due to the sanctions.

As mentioned above, refineries in Russia expect prepayment by bank-transfer, otherwise they will not release any product. It is also the law, not just “company policy‟. Documentary letters of credit, escrow accounts or blocked funds do not allow prepayment. They are instruments which release payment only after the shipment has been made and for that the products have to be prepaid.

Knowing that most foreign buyers are not comfortable prepaying, even if SWIFT were not closed for Russian banks, we have been working with a finance company with offices in England, Portugal, and Holland. Together we have established a system which allows us to prepay using pre-export financing, but for this purpose we must receive a financial commitment in the form of a stand-by letter of credit („SBLC‟) only. No other forms of financial guarantees can be used to get pre-export financing. The SBLC must follow a certain format, it must be valid for one year and the amount does not need to be more than the value of one month‟s shipment. The actual payment is not due until the shipment has been made.

This means that the buyer issues an SBLC in the name of the finance company. The finance company subsequently provides us with the pre-export financing and our company arranges all the shipping and inspection logistics from the refinery to the destination port. All this is carried out by our company.

Our company was formed in 1989 and we have never failed to ship, regardless of the geopolitical situation anywhere. However, if we were ever truly unable to ship, we would obviously instruct the finance company to return the SBLC, as we would return the pre-export financing to the finance company. The buyer has absolutely no risks.

All our shipments are inspected at the loading port by Societe Generale de Surveillance (SGS) at our expense. If the buyer wishes to re-inspect at the discharge port, then it will be at the buyer’s expense, and the buyer must use SGS as well. We will not recognize any other inspection company, because if there ever should be a discrepancy, SGS‟s head office in Switzerland will sort it out within days. If any other survey company were to be used, then it could take weeks if not months to settle and we are not prepared to wait for such settlement. We have never had any quality issues in the past.

Neither our company nor the finance company nor our respective banks are subject to sanctions. You can check out our company on the websites of the EU/US/UK/Canadian governments. We also use non-sanctioned, non-Russian, non-European, and non-US/non-UK tanker ships to avoid any conflicts.