Oil and gas supply contracts in the UAE: checks before signing

1.Check petroleum-product permissions and distinguish crude oil

Before signing, identify the product, origin, supplier and intended activity. Verify the supplier’s authority to sell using the relevant ownership records. Check trading, storage, transport and import or export permissions, including exemptions and transitional rules. A commercial licence alone may not satisfy sector requirements. Federal Law No. 14 of 2017 regulates trading in hydrocarbon gases and petroleum derivatives, but excludes crude oil; separate regimes therefore need assessment. Dubai and Abu Dhabi also have emirate-level requirements. This guide concerns supply transactions; exploration and production rights require separate legal review.

2.Make quality and quantity measurable

State the agreed grade, specification and permitted tolerances, consistent with mandatory product standards. Identify the measurement point, unit, reference conditions and testing method. For gas, clarify whether invoicing uses volume, mass or energy content. Agree who samples the product, retains samples and appoints any independent inspector. Specify the evidential status of certificates and how measurement disagreements are resolved; a vague promise of acceptable quality invites disputes.

3.Separate delivery, risk and ownership

Define the delivery point and schedule, responsibility for transport and insurance, and when risk passes. If incorporating Incoterms, identify the selected rule, named place or port and edition. Those rules allocate specified delivery obligations, costs and risk; they do not determine transfer of ownership, payment terms or dispute resolution. Address title separately and ensure the contract fits the actual transport arrangement, including any pipeline or terminal interface.

4.Make price and payment security workable

Record the price or benchmark formula, pricing period, currency, quantity adjustments and allocation of taxes and charges. Link invoices to agreed delivery and inspection documents. If using a letter of credit or guarantee, align its wording, required documents, expiry and claim conditions with the supply contract. A contractual reference to security does not establish that an effective instrument has been issued.

5.Plan for failure and prepare the file

Agree notice procedures and remedies for short delivery, delay or non-conforming product, together with suspension, termination and force-majeure provisions. Set out governing law and the court or arbitration mechanism, considering where enforcement may be needed. Have proposed claim periods and liability limits reviewed against applicable law. Before committing, prepare:

• Party details, seller authority, origin records and relevant permits.
• Specifications, measurement arrangements and inspection documents.
• Delivery, storage, transport and insurance terms.
• The pricing schedule, payment security and dispute clause.