UK: The Risks And Benefits Of Blending On Board – Are You Getting The Right Mix?


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.

Alternatively or in addition, a cargo may be "doped" with additives to modify its performance (either for economic or for legal/ regulatory compliance purposes) and cargoes may be dyed to comply with local laws and regulations.

From a supplier's point of view, blending, doping and dyeing on board (as opposed to upstream or in shore tanks) has a number of advantages.

First, in order to blend, etc. upstream or onshore, a supplier must invest in or lease appropriate blending equipment and/or storage tanks. This not only represents an upfront cost but can cause logistical issues if demand for storage and blending facilities exceeds capacity.

Second, creating a cargo on board allows a supplier to source product from a wider geographical area and at shorter notice. For example if a supplier needs two products to produce the cargo it requires, it does not have to wait until both products are available at the same loadport or send its vessel to a port where the two components are available at the same time. Instead, it can load the first product and direct the vessel to the source of the second. This saves time (and potentially storage and transport costs) and therefore allows suppliers to respond promptly to demand, blending new cargoes en route to the Buyer.

Legal Issues

Blending, doping or dyeing on board gives rise to a number of legal and practical issues, two of the most important of which are considered below.

Cargo Homogeny

By blending or doping a cargo on board a vessel, the supplier relies on the loading process, assisted by the ship's systems and the natural motion of the vessel at sea, to blend the cargo and ensure cargo homogeny.

If blending is not effective, samples drawn at discharge may not be representative and, if the sample does not meet contractual specifications, the cargo might be rejected and/or the subject of a claim. As a consequence, the supplier might find itself in breach of its contractual obligations and/or local laws and regulations.


Blending, doping or dyeing a cargo clearly changes the composition of the cargo. As a consequence, the cargo that is delivered to the Buyer may not correspond to the description of the cargo stated on bills of lading issued upon shipment. If the goods discharged are no longer as described on the bills of lading, the shipowner might be exposed to significant liability. Shipowners will therefore usually request a letter of indemnity from the charterer before agreeing to the blending, doping or dyeing of a cargo on board a vessel.

In CIF, CFR and DES/DAP sale contracts, therefore, it has become increasingly common for a Seller to request a corresponding letter of indemnity from its Buyer where the Buyer requests or requires blending, doping or dyeing of the cargo to take place on board the vessel. For example, under Shell's General Terms and Conditions for Sales and Purchases of Crude Oil (2010 edition), a Buyer that requires a cargo to be commingled, blended, doped, dyed or otherwise altered on board the vessel must indemnify the Seller in respect of all liabilities and losses the Seller may suffer as a result of such a request - and the Buyer's indemnity will be no less wide in scope than the indemnity the Seller is required to give the vessel owner. The usual exclusion of "consequential" losses is also expressly stated not to apply to the Buyer's indemnity to the Seller in this context.

Below, we will look at the giving and receiving of such indemnities from the point of view of both Sellers and Buyers in CIF, CFR and DES/DAP sale transactions.

Best Practice for CIF, CFR and DES/ DAP Sellers

Avoid express obligations to blend, dye and/or dope

So far as possible, Sellers should seek to avoid agreeing in the CIF, CFR or DES/DAP sales contracts to an express obligation to blend, dope or dye the cargo on board the vessel at the Buyer's request prior to discharge. In a particular case, any of these activities might be impossible, impracticable or expose a Seller to onerous liabilities that the Seller may not wish to assume (especially if the Buyer is not considered creditworthy for any indemnity - as to which see below).

Alternatively, if there is to be an express obligation to consent to these operations prior to discharge, the sale contract might be drafted so that any such obligation is subject to the consent of the shipowner and the provision by the Buyer of appropriate indemnities.

Seek a right to be indemnified by the Buyer

For the reasons set out above, shipowners are likely to require a letter of indemnity if the Seller/charterer wishes to blend, dope or dye the cargo. If blending, doping and/or dyeing is carried out at the Buyer's request, the Seller should have a corresponding right in the sale contract to an indemnity from the Buyer before going ahead.

Remember, a letter of indemnity is only as good as the creditworthiness of the party providing the indemnity. Consider the value of the Buyer's letter of indemnity: does it offer adequate protection if given by a Buyer that is already at the limit of its credit with the Seller? Should the Seller have a contractual right to insist that the Buyer's indemnity be countersigned by a first class bank approved by the Seller or that some other form of security be provided in the Seller's discretion?

Agree appropriate amendments to the sale contract

Before taking steps which could alter the cargo's composition, the prudent Seller will obtain the Buyer's clear written agreement that any blending, doping and/or dyeing has been carried out at the Buyer's request (or with its consent) and that the Seller will have satisfied its delivery obligations by delivering the altered cargo.

Best Practice for CIF, CFR and DES/DAP Buyers

Include an express right to require on-board blending, doping or dyeing in the sale contract

For a variety of reasons, a Buyer might ask a Seller to blend, dope or dye a cargo on board the vessel, to comply with local laws and regulations for instance or because a sub-buyer's requirements have changed. It is therefore in the Buyer's interests for the sale contract to include an express obligation on the Seller to procure that the vessel will allow the blending, doping or dyeing of the cargo on board the vessel at the Buyer's request. If the sale contract is silent on this point, the Buyer will be in a much weaker position when seeking the Seller's consent to such operations.

Limit the scope of any indemnity provided to the Seller

If the Buyer provides the Seller with a letter of indemnity, it should limit its scope as far as possible. It should be no wider, for example, than the indemnity the Seller has given the shipowner. So far as possible Buyers should also try to exclude liability for special or consequential losses.

Make sure you know what you are getting

Blending, doping and dyeing processes are not always carried out at the Buyer's request. In order to manage its delivery obligations a DES/ DAP Seller might blend and/or dope a cargo on board the vessel in order to meet contractual specifications at short notice.

The Buyer will not want to discharge a product which is later revealed to contain additives that are not permitted under local law and regulations. However, the Buyer will not necessarily know that the composition of the cargo has been altered on board (or how it has been altered) after the bills of lading were issued. To avoid the problems which might arise as a consequence, a Buyer could insist on a provision in the sale contract which requires the supplier to give written notice of any blending, doping and/or dyeing which occurs on board the vessel and/or to disclose any letters of indemnity which are provided to shipowners in this respect before the vessel arrives.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.