Our Working Methods
Mechanisms of contracting and executing crude oil export agreements.
Santos Energy enters into contracts bi-annually, annually or longer, with qualified companies as per the following process:
1- Santos Energy sends direct invitation letters to International Oil Companies (IOCs) that are having valid contracts together with the other newly qualified companies to submit their requirements of crude oil for the subsequent contracting period.
2- Requests that only sent through E-mail directly to Santos Energy by companies interested in purchasing crude, are to be considered as Santos Energy normally disregards hand-submitted requests and also those submitted through agents, intermediaries, international organizations or any of the foreign diplomatic missions operating or brokerage persons.However, allocations of crude oil usually offered to qualified companies according to the adopted criteria.
3- Electronically e-mailed purchasing requests from companies, intermediaries, agents and international organizations; showing interest in buying crude oil, received by Santos Energy throughout the year. These requests are dealt with in light of the norms and standards adopted by Santos Energy`s Technical Committee that formed by an administrative order and consists of a group of experts. The formed committee undertakes the following measures:
- Examining the activities of each company or organization in order to determine the extent of its compatibility with the adopted criteria, through searching in several reputed web sites and reliable sources in the field to decide whether the applicant company/ organization is qualified or not.
- Unqualified companies are disregarded and reasons for disqualification are disclosed to the applicant companies and they will be tagged as” unqualified” in the tables compiled for this purpose. In turn, qualified companies will be categorizing as “new companies” in the set tables.
These tables will be presented to the Board of Directors and then to the consenting Technical Committee`s recommendations.
1- The execution of the contract commences when crude shipping and commercial financial divisions notified of the contract practical details. This notification will enable the two divisions to implement and follow-up the subject contract that usually starts- up when the buying company (i.e. buyer) submits a request, within a reasonable period, to Santos Holdings specifying its first nomination date to load a cargo of crude oil subject to contract clauses.
2- Santos Holdings ,on its part, will fix a loading date and inform the buyer accordingly who will, in turn, nominates in writing a vessel for cargo loading at the fixed date. Santos Holdings,however, will maintain its option of either accepts or rejects the nominated vessel in light of her specifications and the requirements of the loading terminal.
3-The buyer shall open an documentary Bank Guarantee-SBLC (365+1) equivalent to 120% of the one-month purchase volume in a reputed bank accepted by the seller Bank within a period of (7) seven days after signing contract . The BG-SBLC amount should not in any case be less than the amount estimated to cover the cargo`s value. Subsequently, Santos Holdings will start contract process .
Payment terms after delivery is MT103/TT .
4- After loading completion of a vessel with the required volume, the respective loading port will produce shipping documents that show loaded quantity, API gravity, Bill of Lading (B/L) date and the final destination of shipment together with any other documents related to the loaded cargo.
5- In Pi and Ci,Santos Holdings calculates and notifies the respective client company of the final unit price of the cargo (i.e. U.S Dollar per Barrel).In turn, the respective client company will settle the value of the cargo within period of not more than (5) days from the B/L date
6- The crude oil is like other producible and exportable crudes that not sold at a fixed price, discount or premium. In fact, it is determined according to a unified pricing mechanism internationally known as the Official Selling Price (OSP) applicable to client companies and for each of the international markets.
In light of the above,Santos Holdings does emphasize that no negotiations have had ever been taken place with any party whether it is a company, intermediary, agent, international organization or any diplomatic mission on the subject of allocations of crude oil or the official sale prices. It is also worth to stress here that no commissions or discounts have had ever been offered to any of the Buyers because the mechanism adopted in crude oil allocation and pricing is simply applicable to all companies without exception. However, this mechanism, as formerly outlined, embarks with the issuance of an administrative order calling for the formation of a Technical Committee where the legal and auditing authorities being represented therein.
3- Electronically e-mailed purchasing requests from companies, intermediaries, agents and international organizations; showing interest in buying crude oil, received by Santos Energy throughout the year. These requests are dealt with in light of the norms and standards adopted by Santos Energy Technical Committee that formed by an administrative order and consists of a group of experts. The formed committee undertakes the following measures:
- Examining the activities of each company or organization in order to determine the extent of its compatibility with the adopted criteria, through searching in several reputed web sites and reliable sources in the field to decide whether the applicant company/ organization is qualified or not.
- Unqualified companies are disregarded and reasons for disqualification are disclosed to the applicant companies and they will be tagged as” unqualified” in the tables compiled for this purpose. In turn, qualified companies will be categorizing as “new companies” in the set tables.
These tables will be presented to the Board of Directors and then to the consenting Technical Committee`s recommendations.
1- The execution of the contract commences when crude shipping and commercial financial divisions notified of the contract practical details. This notification will enable the two divisions to implement and follow-up the subject contract that usually starts- up when the buying company (i.e. buyer) submits a request, within a reasonable period, to Santos Energy specifying its first nomination date to load a cargo of crude oil subject to contract clauses.
2- Santos Energy ,on its part, will fix a loading date and inform the buyer accordingly who will, in turn, nominates in writing a vessel for cargo loading at the fixed date. Santos Energy,however, will maintain its option of either accepts or rejects the nominated vessel in light of her specifications and the requirements of the loading terminal.
3-The buyer shall open an documentary Bank Guarantee-SBLC (365+1) equivalent to 120% of the one-month purchase volume in a reputed bank accepted by the seller Bank within a period of (7) seven days after signing contract . The BG-SBLC amount should not in any case be less than the amount estimated to cover the cargo`s value. Subsequently, Santos Energy will start contract process .
Payment terms after delivery is MT103/TT .
4- After loading completion of a vessel with the required volume, the respective loading port will produce shipping documents that show loaded quantity, API gravity, Bill of Lading (B/L) date and the final destination of shipment together with any other documents related to the loaded cargo.
5- In Pi and Ci,Santos Holdings calculates and notifies the respective client company of the final unit price of the cargo (i.e. U.S Dollar per Barrel).In turn, the respective client company will settle the value of the cargo within period of not more than (5) days from the B/L date
6- The crude oil is like other producible and exportable crudes that not sold at a fixed price, discount or premium. In fact, it is determined according to a unified pricing mechanism internationally known as the Official Selling Price (OSP) applicable to client companies and for each of the international markets.
In light of the above,Santos Energy does emphasize that no negotiations have had ever been taken place with any party whether it is a company, intermediary, agent, international organization or any diplomatic mission on the subject of allocations of crude oil or the official sale prices. It is also worth to stress here that no commissions or discounts have had ever been offered to any of the Buyers because the mechanism adopted in crude oil allocation and pricing is simply applicable to all companies without exception. However, this mechanism, as formerly outlined, embarks with the issuance of an administrative order calling for the formation of a Technical Committee where the legal and auditing authorities being represented therein.
