The Risks and Benefits of Blending on Board – Are You Getting the Right Mix?

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Introduction

For logistical and economic reasons, which are considered below, there is an increasing trend (especially in the oil trade) for blending, doping and dyeing cargoes on board vessels.

This client alert:

• looks at the practice of blending, doping and dyeing cargoes on board vessels; and

• sets out some tips for best practice in documenting the indemnities that are commonly required to be given by Buyers to Sellers in CIF, CFR and DES/ DAP sales transactions in connection with such operations.

Blending on board - who, what, why?

Blending is the commingling of two or more products into a single cargo. In the commodities market, blending represents a quick and economical means of producing a variety of products at short notice, using existing inventory or component products that are cheaply and/or readily available.

Blending might be carried out to:

• alter existing stock so that it meets the specifications in a new contract;

• make a completely new product to meet demand in the market; or

• decontaminate an existing product.

Please see full alert below for more information.

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