12 Refined Petroleum Products and Chemicals We Finance

1. Ultra Low Sulfur Diesel (ULSD)

ULSD is used across road transport, construction equipment, and some heating applications. It contains very low sulfur, usually under 15 ppm, which helps it meet current emissions standards.

When you finance ULSD assets, you are usually backing storage, refinery output, and distribution systems. These flows move large volumes and are sensitive to regional supply disruptions and formulation rules.

Risk management usually focuses on price swings, changing environmental rules, and regional specification requirements such as CARB-style formulations.

2. Premium Motor Gasoline (RON 95)

RON 95 balances octane performance with broad consumer demand. It is blended from refinery streams such as reformate and isomerate, often with detergent and additive packages.

If you finance projects tied to RON 95, look closely at refinery capacity, blending economics, storage logistics, sulfur limits, aromatic content, and local fuel standards.

Pricing can move with crude, taxes, and seasonal demand. Strong offtake agreements and quality controls help reduce execution risk.

3. Jet A-1 Aviation Turbine Fuel

Jet A-1 is a kerosene-type aviation fuel used by commercial and many military turbine aircraft. It must meet strict performance and safety requirements, including cold-weather operability and thermal stability.

When underwriting Jet A-1, focus on contamination risk, certified sampling, product testing, storage discipline, and compliance with standards such as ASTM D1655. Those controls protect resale value and reduce delivery disputes.

4. Hydrotreated Vegetable Oil (HVO) Renewable Diesel

HVO is a paraffinic renewable diesel produced by hydrotreating oils, fats, or waste-based feedstocks. It is often used as a drop-in replacement for conventional diesel without major engine modification.

When evaluating HVO, pay attention to feedstock origin, sustainability certification, traceability, supplier warranties, blending rules, and equipment compatibility. Carbon claims depend heavily on feedstock quality and provenance.

5. Naphtha (Light Steam-Cracked Feedstock)

Light naphtha is an important steam-cracking feedstock for ethylene and other light olefins. It is valued for volatility and hydrogen-to-carbon balance, which can improve cracker economics.

Market value is linked more closely to petrochemical demand than to transport fuels. Financing decisions should track sulfur, benzene, composition, and processing needs because those variables affect yield and compliance cost.

6. No. 2 Heating Oil (Distillate Fuel Oil)

No. 2 heating oil is a middle-distillate product used in residential and small commercial heating. It shares characteristics with diesel and requires safe storage and handling to preserve quality and prevent leakage.

When financing this product, account for seasonal demand, tank inspection, storage risk, and price volatility. Those factors can materially affect resale value and timing of repayment.

7. Gas Oil / Gasoil (Diesel Range Fuel)

Gasoil refers to diesel-range middle distillates used across transport, power generation, and some industrial burning applications. Grades differ by sulfur content and destination market rules.

Lower-sulfur grades are standard in regulated air-quality markets. Higher-sulfur grades still appear in certain industrial uses. Storage and handling are simpler than gasoline, but contamination and grade-mixing still matter for finance and resale.

8. Fuel Oil No. 6 (Bunker C Heavy Fuel Oil)

Fuel Oil No. 6 is a residual heavy fuel used mainly in large boilers and marine bunkers. It is viscous, often requires preheating, and may contain sulfur and heavier contaminants that affect handling and emissions.

Financing requires attention to sulfur limits, heating and transfer systems, storage management, and regulatory compliance for bunkering or industrial use.

9. Liquefied Petroleum Gas (LPG) Propane / Butane

LPG financing supports storage, transport, and distribution of propane and butane. Because LPG is stored under pressure and vapor is heavier than air, leak detection and terminal safety are central to risk control.

Facilities often cover cylinders, bulk storage, loading equipment, vaporizers, and distribution infrastructure. Seasonal demand and product mix affect value and turnover.

10. Aviation Kerosene (Jet B Blend)

Jet B is a wide-cut aviation kerosene blend used where extremely low freezing points matter. It is more volatile than standard Jet A fuels, so storage, grounding, bonding, and fire controls matter more.

Demand is niche and tied to cold-region operations, so financing should align carefully with seasonal usage, supply chain reliability, and quality-control requirements.

11. Petrochemical Feedstock (Ethylene Cracker Naphtha)

Naphtha remains a core liquid feedstock for ethylene cracking in much of Europe and Asia. Compared with ethane, it gives more co-products, which can support margin but also adds operating complexity.

When financing projects tied to this feedstock, assess refinery integration, feedstock access, switching flexibility between naphtha and alternative feeds, and product mix flexibility.

12. Bitumen / Asphalt Binder (Paving Grade)

Bitumen is the sticky petroleum binder used in pavements, roads, and parking surfaces. Paving-grade binders are selected based on climate and traffic requirements.

Paving-grade binders and modified binders with polymers or additives require source consistency, proper storage, and reliable specification control to avoid degradation before use.

Risk Assessment Strategies

Model crude, product, and crack spread scenarios over one to five years. Use at least a base case, a downside case, and a stress case. Then map those scenarios to debt service, maintenance capex, and liquidity needs.

Counterparty credit should be checked using payment history, bank references, trade references, and public financial information where available. Lower-quality counterparties may require parent support, trade collateral, or confirmed offtake.

Feed these variables into a weighted risk model to drive pricing, advance rates, reserve requirements, and covenant strength.

Industry Best Practices For Due Diligence

Feedstock and product contracts should be confirmed in writing, with clear volume commitments, pricing formulas, and quality specifications. Routing, storage capacity, and terminal access also need to be confirmed because delivery bottlenecks can destroy cash flow planning.

Environmental permits, emissions liabilities, remediation exposure, and insurance coverage must be reviewed early. It also makes sense to tie covenant triggers to EBITDA, inventory valuation, and leverage to catch deterioration before it becomes a default event.

International Trade Regulations

Every product needs the correct Harmonized System code, tariff treatment, customs value, and country-of-origin treatment. Errors here can lead to fines, delays, or detention.

Controlled chemicals and certain fuel blends may also require export licenses or restricted-party review. Documentation should normally include the commercial invoice, packing list, bill of lading, and any required hazardous goods declarations.

Environmental Standards And Safety Protocols

Refineries, terminals, and chemical operations must comply with air, waste, water, spill-prevention, and site-safety rules. Process safety management, written procedures, maintenance logs, employee training, and emergency response plans are all relevant to financability.

Material safety data sheets, inspection records, and environmental approvals often become part of lender and insurer diligence, especially for higher-risk products and sites.