The book
Crude oil, refined products, natural gas.
Oil and gas is the practice, not one line within it. What follows is what is actually traded in each book, how quality and quantity are established, and which documents leave the load port with the cargo.
I
Crude oil
Where the argument is almost never about the oil, and almost always about the quantity figure.
Crude disputes concentrate on measurement. Ship's figures and shore tank figures disagree as a matter of routine, and a contract that does not say which governs has left the difference to whoever shouts louder. Ours says, before the vessel is nominated.
Quality is established at the load port against the test methods named in the contract, and the certificate of quality travels with the cargo. Density, sulphur, water and sediment are the figures that move money, so they are the figures that are witnessed.
- Grades
- Detail not yet confirmed: Crude grades traded. [•]
- Cargo sizes
- Detail not yet confirmed: Typical cargo sizes. [•]
- Pricing basis
- Published benchmark plus or minus a differential, over a pricing period fixed in the contract
- Quantity basis
- Bill of lading quantity, with the governing figure stated before nomination
- Inspection
- Petroleum inspection by SGS, Bureau Veritas, Intertek, AmSpec or Saybolt, appointed jointly or nominated by the buyer
- Delivery terms
- Incoterms 2020
Documents issued
- Certificate of quality and certificate of quantity, issued at the load port
- Bill of lading
- Certificate of origin
- Ullage report and time sheet
- Cargo manifest and master's receipt for documents
II
Refined products
Where a specification without a test method is not a specification.
Two laboratories can report the same parcel differently and both be right, because they used different methods. So each limit in a Mundoverde contract carries the method it is measured by, and the tolerance is stated rather than assumed.
Off-specification product is a commercial problem at the load port and a legal one at the discharge port. Retained samples are sealed and held so that a later disagreement has something to test rather than something to argue about.
- Products
- Detail not yet confirmed: Refined products traded. [•]
- Cargo sizes
- Detail not yet confirmed: Typical cargo sizes. [•]
- Specification basis
- Every limit stated with its test method and tolerance
- Samples
- Sealed and retained at the load port for the period the contract states
- Inspection
- Petroleum inspection by SGS, Bureau Veritas, Intertek, AmSpec or Saybolt, appointed jointly or nominated by the buyer
- Delivery terms
- Incoterms 2020
Documents issued
- Certificate of quality, with test methods, and certificate of quantity
- Bill of lading
- Certificate of origin
- Sealed retained samples, with the sampling record
- Tank or vessel inspection report before loading
III
Natural gas and LNG
Where what is sold is energy, and volume is only the way it is counted.
Gas is invoiced on energy delivered, so the heating value and the method of determining it matter as much as the quantity. Where that is not fixed in advance, two honest parties reach two different invoices from the same cargo.
Boil-off, heel and the measurement point are set out in the contract for the same reason. They are ordinary features of moving a cryogenic cargo, and they are only contentious when nobody wrote down who carries them.
- Products
- Detail not yet confirmed: Gas products traded. [•]
- Gas liquids
- Detail not yet confirmed: Gas liquids and related products. [•]
- Cargo sizes
- Detail not yet confirmed: Typical cargo sizes. [•]
- Invoicing basis
- Energy delivered, on the heating value and measurement method stated in the contract
- Boil-off and heel
- Allocated in the contract before lifting
- Inspection
- Petroleum inspection by SGS, Bureau Veritas, Intertek, AmSpec or Saybolt, appointed jointly or nominated by the buyer
- Delivery terms
- Incoterms 2020
Documents issued
- Certificate of quality, with composition and heating value
- Bill of lading and cargo manifest
- Certificate of origin
- Custody transfer measurement report
- Time sheet and statement of facts
Enquiries
Name the grade, the volume, the delivery basis and the instrument.
Those four facts decide whether a cargo is possible at all. With them an enquiry can be answered properly, including with a no; without them it can only be acknowledged.