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Trade Finance

A physical energy trade needs a payment structure both sides trust. Yorkwell Petroleum coordinates that structure with the banks and counterparties involved.

What we do

We work with the buyer, the seller and their banks to line up the payment terms, the documents and the timetable for a trade. That includes the documents a bank will ask for and how they match the commercial contract.

Most disputes over payment come from documents that do not agree with each other. So we check that the contract, the payment instrument and the shipping and quality documents describe the same cargo in the same words.

How a documentary letter of credit works

Buyer → Buyer's bankThe buyer applies for a letter of credit.
Buyer's bank → Seller's bankThe buyer's bank issues the credit.
Seller's bank → SellerThe seller's bank advises the credit to the seller.
Seller → Seller's bankAfter loading, the seller presents the shipping and quality documents.
Seller's bank → Buyer's bankThe documents are checked and sent on.
Buyer's bank → SellerPayment is made against compliant documents.

A simplified sequence. The banks act on documents, not on the cargo itself.

Common payment structures

Documentary letter of credit: the buyer's bank pays against the shipping and quality documents named in the credit.
Standby letter of credit: a bank's undertaking to pay if the buyer does not.
Payment against documents or on open account: used between parties with an established relationship.

What we do not do

Yorkwell Petroleum is not a bank and does not lend money. Any financing is provided by a financial institution, on that institution's terms and after its own approvals.

Payment instructions

Payment instructions for a trade with Yorkwell Petroleum are given in writing and match the signed contract. See also brokerage and quality assurance.

Questions we are asked

Does Yorkwell provide credit or loans?

No. Financing comes from banks and other financial institutions, on their terms.

Which bank instruments are used?

The instrument is agreed between the parties and their banks. Documentary and standby letters of credit are the most common in physical oil trades.

When is payment made?

Payment timing is set by the contract and, where a letter of credit is used, by the documents it calls for.

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Tell us the product, quantity, destination and timing, and we will reply in writing.

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