The import solutions for crude oil and LNG mainly cover the following aspects:
Long-Term Contracts:
Long-term contracts are the primary method for Middle Eastern countries to sell crude oil. Oil companies typically sign long-term supply contracts directly with refineries from September to October each year for the following year, determining annual supply volumes and prices. These contracts usually specify the port of destination for delivery, but specific details such as the loading period, quantity, and price need to be negotiated several months in advance.
Spot Purchases:
The spot market gradually emerged after the second oil crisis in the 20th century. Spot purchases offer greater flexibility and convenience. Many refineries choose to combine long-term contracts with spot purchases in a certain ratio, enabling them to adjust procurement varieties and quantities reasonably under different market conditions.
Tariff Policies:
Tariff policies significantly impact the import of crude oil and LNG. For instance, after China imposed a 15% retaliatory tariff on US LNG in February 2025, no US LNG was imported into China for three months. Additionally, Indonesia increased its energy purchases from the US in an attempt to balance its trade surplus with the US and avoid high additional tariffs on its exports.
Customs Declaration Process:
The customs declaration process for importing crude oil and LNG includes preparation, document exchange upon arrival, inspection application, customs declaration, inspection and release, and subsequent supervision. The specific steps are as follows:
Preparation Phase: Determine the commodity code, obtain relevant licenses, and prepare documents such as contracts, invoices, packing lists, and bills of lading.
Document Exchange upon Arrival: Exchange the original bill of lading for a delivery order at the shipping company or its agent.
Inspection Application: Submit inspection application documents to the entry-exit inspection and quarantine authorities. Once the inspection is passed, an "Entry Goods Clearance Form" will be issued.
Customs Declaration: Submit customs declaration documents to the customs and pay the corresponding tariffs and value-added tax.
Inspection and Release: After the customs inspects the goods, a release stamp will be affixed on the delivery order.
Subsequent Supervision: The customs conducts subsequent supervision on the goods to ensure their legal use and compliance with flow regulations.
Business Process:
The buyer issues a Letter of Intent (LOI).
The seller responds with a Firm Offer (FCO).
The buyer issues an Irrevocable Corporate Purchase Order (ICPO).
The seller provides and finalizes the signing of the Sales and Purchase Agreement (SPA).
The buyer opens a Letter of Credit (L/C).
The seller provides a Performance Bond (2% PB).
The seller loads the goods and arranges shipment.
After the goods arrive at the port and pass inspection, the buyer makes payment via Telegraphic Transfer (TT).
