How to Verify a Petrochemical Supplier and Avoid Trade Fraud

The surest defence against petrochemical trade fraud is to refuse to pay money until you have independently verified three things: that the seller is a real company, that the product exists and is controlled by someone who can sell it, and that the payment route is safe. Fraudsters rely on urgency, secrecy and unusual prices to stop buyers checking. A buyer who insists on checking, and who pays only through structures that protect them, removes most of the opportunity.

This guide describes the patterns that recur in fraudulent offers in bulk chemical and fuel-related trading, the due-diligence steps that expose them, and a red-flag checklist you can use on any new counterparty. It is general guidance. It does not accuse any company, and no pattern here proves fraud on its own: it tells you where to look harder.

Why petrochemicals attract fraud

Several features of the sector make it attractive to fraudsters:

• Large values. A single cargo is worth a great deal, so a fraud only has to work once.
• Intermediaries. Much trade passes through brokers, traders and agents, so a buyer often cannot see who owns the product.
• Opaque pricing. Prices move daily and vary by grade, port and terms, which makes an "unusually good" offer easy to dress up as a market opportunity.
• Document-driven payment. Because payment follows documents, forged documents can look like proof.
• Cross-border distance. Buyers cannot easily visit a tank terminal or a plant before they commit.
• Urgency. Cargo loading windows and quotation validity are real, which lets a fraudster justify pressure.

None of this means that trading through intermediaries is wrong. Legitimate traders and brokers perform a real function. It means you should know exactly who each party in the chain is, what they own or control, and what they are being paid for.

Common scam patterns

Fake allocations

The scammer offers an "allocation" of product from a major producer or terminal, usually at a price well below the market, with the buyer told to act quickly because supply is limited. The product may be described as being available from a named refinery or port, which is used to borrow credibility.

What is missing is any proof that the seller owns or controls the product. Genuine sellers can show a supply contract, a title chain or a storage agreement and will let you verify it independently. A fake allocation depends on you not asking.

Procedure chains

The seller does not give a direct offer. Instead the buyer is sent through a "procedure": a staged series of steps with a sequence of "mandates", "seller's representatives", "buyer's mandates" and "facilitators", each with its own paperwork and often its own fee. The chain keeps the buyer busy and keeps each party at one remove from the actual product.

A procedure chain is a warning in itself. In real trade, the buyer and seller talk, agree a price and terms, and negotiate a contract. Long, opaque sequences of intermediaries, each demanding confidentiality, are the opposite of that.

Fee requests

At some point, the buyer is asked to pay a fee in advance. It may be called an inspection fee, a "proof of product" fee, a tank storage fee, a registration fee, a "ready, willing and able" letter fee, a bank instrument fee, a legal fee, a performance bond or a notary charge. The amount is small compared with the value of the cargo, so paying seems reasonable.

The fees do not stop. Each one unlocks the next step, and the product never arrives. A buyer who has paid once is more likely to pay again, because the loss already incurred makes walking away feel like admitting a mistake.

Rule: a legitimate seller does not need you to pay it a fee in order to view an offer, to receive a contract, or to see proof of product. Real inspection and storage costs arise later in the transaction and are paid to the inspection company or terminal against an invoice, through a defined route.

Forged and altered documents

Fraudsters supply documents that look professional but have been fabricated or altered. Examples include:

• A certificate of analysis or inspection certificate that mimics the format of a known company.
• A bill of lading with a plausible vessel name and number.
• A letter or statement purporting to come from a bank, such as a "proof of funds" or "proof of product" letter.
• A supply contract or tank storage receipt with stamps and signatures.
• A copy of a company registration or licence.

A document is evidence, not proof. Without independent verification, a polished PDF means little. Typical tells include inconsistent fonts or layouts, dates that do not fit, numbers that do not add up, contact details that go to free email domains, and bank letters that arrive from the seller rather than the bank.

Ghost cargoes

A ghost cargo is a shipment that does not exist. The seller describes a vessel, a loading date and a quantity, perhaps supported by a vessel name and documents, but when the buyer asks to verify the vessel or the cargo, answers are vague. Sometimes the vessel is real but is not carrying the cargo described, or is not where it is said to be. Sometimes the vessel has been named only to look credible.

Payment diversion and business email compromise

This scam targets deals that are real. A criminal gains access to, or imitates, an email account involved in the transaction and sends changed bank details shortly before payment is due. The buyer pays the genuine invoice into the criminal's account.

Signs include a last-minute change of beneficiary account, a different country or bank from earlier invoices, an email address that differs by one character from the usual one, and pressure to pay immediately. Section "Safe payment structures" below sets out the defence.

Due-diligence steps

Do these in order, and stop if a step fails. Each one is cheap compared with the loss of a payment.

1. Establish who you are dealing with

• Obtain the full legal name, registered address, registration number and date of incorporation.
• Check these against the official company registry of the jurisdiction concerned. Do not use a registry link supplied by the counterparty: find the registry yourself.
• Confirm the company is active, who the directors and shareholders are where the registry shows them, and that the registered activity fits petrochemical trading.
• Compare the registry's address and details with what is on the website, the letterhead and the contract. Differences need an explanation.
• Check the website: age of the domain, whether the company's contact details are consistent, and whether contact is through a company email domain rather than a free webmail account.

2. Confirm the person is authorised

A real company can still be impersonated, and a real employee can lack authority.

• Call the company on a switchboard number you found independently, and ask for the person by name.
• Ask what authority the person has to bind the company, and get it in writing from an authorised signatory.
• Be wary of sellers who are "mandates" or "representatives" of an unnamed principal.

3. Ask for references and check them yourself

• Request trade references from buyers or suppliers the company has dealt with in similar products and volumes.
• Contact those references through contact details you find independently, not from the seller.
• Ask banks for a bank reference, preferably through your own bank to theirs.
• Search for the company and its directors in news, court records and sanctions lists. Sanctions and compliance screening is a legal requirement for many buyers, and it must cover vessels and ports as well as parties.

4. Test product control

Ask the seller to show how it controls the product:

• For a producer: a plant or terminal you can verify, and a supply arrangement.
• For a trader: a supply contract or purchase order with its own supplier, which you may need to view under confidentiality.
• For tank stock: a storage agreement and a statement of stock held, which you can verify directly with the terminal operator using contact details you find yourself.

If the seller refuses any form of verification on the grounds of confidentiality, ask whether an independent party under a non-disclosure agreement can confirm it. A refusal of all verification is a serious red flag.

5. Verify the vessel and shipment

Where a specific vessel is named:

• Check the vessel's seven-digit IMO number against independent shipping databases and the flag registry, and confirm the vessel type is capable of carrying the product.
• Check the current position and recent port calls through a commercial vessel-tracking service, and see whether they fit the stated loading plan.
• Confirm with the shipping line or the vessel's agent that the booking or fixture exists, using contacts you find independently.
• For containers, check the container numbers on the carrier's own tracking page.
• Confirm the bill of lading number with the carrier before relying on it.

6. Use independent inspection

Independent inspection by a recognised company is one of the best controls available, as it addresses quantity, quality and the existence of the goods. It should be appointed and paid for in a way that keeps the inspector independent of the seller, with the report coming directly from the inspector. Verify the report with the inspection company itself, using contact details you find yourself. Chemineral can arrange pre-shipment inspection by SGS or Intertek for its buyers, and buyers of any supplier should ask for the same level of independent verification.

7. Visit, or send someone

Where the value justifies it, visit the plant, terminal or office, or send a trusted local agent or inspector. A visit can confirm that the premises exist, who works there, what is stored, and whether people recognise the company's name. Do not rely on photographs or videos supplied by the seller.

8. Read the contract

Insist on a written contract signed by authorised signatories of identified companies, setting out the product specification, quantity and tolerance, price, Incoterms, delivery window, payment terms, inspection arrangements, documents and governing law. Our Incoterms 2020 guide and export shipping documents guide explain the terms and documents you should expect to see.

Safe payment structures

How you pay matters as much as who you pay.

• Letter of credit. A properly issued documentary credit means the bank pays only against compliant documents, so the seller must actually ship to get paid. It is not fraud-proof, because forged documents can still be presented, so combine it with independent inspection and a recognised issuing bank. Our letter of credit guide explains how credits work.
• Staged payments. For first-time deals, split payment so that no single transfer is a loss you cannot bear, and tie each stage to a verifiable event such as an inspection certificate or a bill of lading released by the carrier.
• Payment against documents with inspection. Make the final payment conditional on an independent inspection report, and original documents released through the banking chain.
• Escrow or trade-finance intermediaries. A regulated bank or escrow agent can hold funds until agreed conditions are met. Be careful: fraudsters also set up fake escrow services, so use only regulated institutions you choose, not ones the seller proposes.
• Pay the company, in its own name, in its own country. Avoid payment to a third party, a personal account, or an account in a country unrelated to the seller.

Verify bank details before every first payment and after any change. Call a number you already trust, not one in the email that announced the change. Treat any change of bank details as suspicious until verified.

Never pay an advance "fee" to view an offer, a "bond", a "proof of product" charge, or any payment to unlock an introduction.

Red flags checklist

No single item proves fraud, but several together should stop you.

About the offer

• The price is well below the market for the product, grade and port.
• Supply is described as an "allocation", with limited time to accept.
• The seller refuses to name the producer, terminal or vessel until you sign or pay something.
• Quantities are very large and available at short notice on terms that sound too generous.
• The offer reaches you through a chain of unknown intermediaries.

About the seller

• Contact is only by messaging apps or free webmail.
• The company cannot be found on the official registry, or the details do not match.
• Directors, address or website look recently created or generic.
• They avoid calls, video meetings or site visits.
• They pressure you to move quickly and discourage verification.

About the process

• A "procedure" with multiple mandates and facilitators.
• Fees requested before anything has been shown.
• Requests for your bank details, ID, or a proof of funds before a draft contract exists, particularly if they ask you to share it widely.
• A contract that cannot be amended, or that you are asked to sign before being able to verify anything.
• Refusal of independent inspection, or insistence on an inspector the seller chooses and controls.

About the documents

• Documents that arrive from the seller but claim to come from a bank or an inspector.
• Inconsistent names, dates, quantities or vessel details.
• A bill of lading for a vessel or voyage you cannot verify.
• Bank instruments you cannot confirm directly with the issuing bank.

About the payment

• Payment to an account in a different name or country from the seller.
• A last-minute change of bank details.
• Pressure to pay before inspection or before documents are verified.

If you suspect fraud

1. Stop all payments and communications that commit you to anything.
2. Preserve emails, messages, documents and bank records.
3. If you have already paid, contact your bank immediately. Speed matters, as banks may be able to attempt a recall of the payment.
4. Report to your national fraud-reporting agency or police, and where relevant to your bank's fraud team.
5. Inform the real parties whose names were used, such as the genuine terminal, inspection company or bank, using contact details you find yourself.
6. Take legal advice before engaging further with the other side.

How a legitimate supplier behaves

A real supplier expects to be checked, and welcomes it. It will normally:

• Provide its legal name, registration details and an address you can verify.
• Make a clear written offer with defined validity. Chemineral's firm offers, for example, are valid for 72 hours, and a quotation should say how long it stands.
• Name the loading port. Chemineral exports from Sohar and Salalah in the Sultanate of Oman.
• Accept independent inspection and a payment structure that protects both sides.
• Answer questions about product, documents and logistics without demanding fees to proceed.

You should apply the same checks to Chemineral that you would to any supplier. Ask for what you need to be comfortable, and verify it independently.

Frequently asked questions

How can I check that a company is real?

Look it up on the official company registry for its jurisdiction, using a link you found yourself. Confirm the name, address, status and directors, and compare them to the website, contract and bank details. Then call the company on an independently sourced switchboard number.

Is a proof-of-product document enough?

No. It is a document the seller supplied, and documents can be forged or reused. Verify product control directly with the terminal operator or the producer, and rely on independent inspection of the actual goods.

Should I ever pay a fee before seeing a contract?

As a rule, no. Legitimate sellers do not charge to show an offer, to send a contract or to arrange proof of product. If a third-party cost is genuine, it should be invoiced by a verifiable company and paid through a route you control.

Is a letter of credit safe against fraud?

It is safer than paying in advance, but it is not fraud-proof, because a bank pays against documents and not against the goods themselves. Use a recognised issuing bank, and add independent inspection so there is evidence of what was actually loaded.

What should I do if the seller will not allow an independent inspection?

Treat it as a major red flag. Independent inspection protects both parties. A refusal, or an insistence on the seller's own inspector, is a reason to pause or walk away.

How do I verify a vessel?

Check the IMO number against independent shipping databases, review its tracking history, and confirm the booking with the carrier or agent through contact details you find yourself. A vessel that exists is not proof that your cargo is on it.

Talk to us

If you are assessing an offer and want a second view on the documents, terms and inspection arrangements before you commit, contact the Chemineral trade desk. We are happy to be checked as thoroughly as any other supplier.