What is Proof of Product? (PoP)

Proof of product (PoP)  is an essential document set in petroleum trading which is documentary evidence that the product exists.

The PoP is crucial from the buyer’s perspective but the important thing about proof of product to the buyer is that it should be independently verifiable meaning that there should be a third party (person or organisation other than the buyer or the Seller) who provide the documents that indicate or confirm that the product exist. So the real question to ask about any PoP document is can “is this an independently generated document coming from a third party that I can verify?”

There are many types of documents that a Seller will send to you as PoP which do not meet all of the criteria above but that does not mean that they are fake. For example, you may receive a document from a seller advising allocation of petroleum volumes to the seller issued by a foreign ministry of petroleum, if there is no way of independently verifying this document such as by calling the particular ministry yourself (or your agent) or confirming from the public media or by logging into a government information database then you cannot consider the particular PoP document to be adequate. Please note that we are not saying that the document is fake. However because information is not readily available to the public in all countries, the document may not be verifiable as a document that was issued by that particular ministry of petroleum.  The document may very well be fully authentic. How you verify such is for another day!

Now the more important thing is that we have shared what makes for PoP that the buyer can rely on. The document categories that meet these conditions are

  • quality and quantity (Q&Q) inspection report issued by third party independent verification agencies such as SGS, Intertek etc.
  • Seller’s Tank Storage Receipt
  • Bill of Lading
  • Injection reports

There are other points to watch out for even with this documents that are listed above such as the reputation of the tank farm, the shipping company issuing the Bill of Lading etc but that will be all for another day as well.

What should be assuring for buyers is that by the time any of these documents are produced for a seller, the seller would have either taken title (ownership) or control i.e. authority to sell (allocation).

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