Pre-financing of crude oil
When a small producer discovered a crude oil field in Kazakhstan, they wanted to release cash from future exports to assist in the development of their business.
Vitol was invited to participate in a pre-financing venture:
- Vitol entered into an offtake agreement with the producer
- The bank agreed to loan funds to the producer based on the security of the offtake agreement
- A tri-partite agreement was signed between the producer, the bank and Vitol
- Vitol pays part of the value of each cargo directly to the bank, repaying the producer’s loan
Vitol’s presence in this three-way agreement was the key to its success.