Shortage and Contamination Claims For Bulk Oil Cargoes

Shortage and Contamination Claims For Bulk Oil Cargoes
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Claims arising from the carriage of oil cargoes are often substantial and may allege either shortage or contamination or both. This chapter provides guidance on how tanker operators can minimise the risk of cargo loss or damage and defend themselves should claims arise.

Oil Shortages

In general, oil shortage claims are based upon a discrepancy between the quantity of cargo as stated in the B/L and the outturn quantity as calculated in the discharge port. Both these figures are frequently derived from shore tank calibration data. The most common arguments are that :

  • The ship is bound by the figure stated in the B/L.
  • the shore tank calibrations are more accurate than the ship’s tank calibrations.
  • the oil has become contaminated by water after loading.
  • some oil remains on board the ship.

The carrier’s defence is commonly based upon the accuracy of the ship’s cargo figures and seeks to demonstrate that they were comparable with the B/L figure, that there was no significant in-transit loss, that any onboard quantity (OBQ) prior to loading has been taken into consideration and that all the cargo has been discharged with none remaining on board (ROB). The following pages consider each phase of a typical tanker voyage and look at the likely causes of difficulty.

Before Arrival at the Load Port

The cargo officer should prepare a loading plan taking into account stability, trim and stress. Where draught restrictions permit, it may be advisable to plan to leave the load port with a trim that avoids the need for internal transfers of cargo during the loaded passage. The inert gas system, if fitted, should be fully operational in readiness for the forthcoming cargo operation. The oxygen content of the cargo tanks should be as low as possible before arrival and a record of all tank readings should be maintained.

On Arrival at the Berth

Once the ship is securely moored, it is important to liaise with representatives from the shore loading facility and to ensure continued good communications throughout the loading. All relevant information must be exchanged between ship and shore, including details of the ship’s loading plan, maximum loading rates, shutdown procedures, safety regulations and cargo data.

Before Loading

The ship’s cargo valves and pipelines should be correctly set for the reception of cargo and the relevant tank valves opened. Before loading, it is customary for a joint inspection of the cargo tanks to be made by shore representatives and ship’s officers to confirm that the tanks are properly drained and in a suitable condition to load the designated cargo. In general, the completion of such an inspection does not relieve the owner of his responsibility to ensure the correct condition of the cargo tanks.

In large tankers and where tanks are inerted, such inspections are difficult and it may be necessary to rely on the ship’s gauging equipment rather than any visual inspection. The measurement of any OBQ should be carefully undertaken, preferably jointly with the shore representatives. The depth of any residues should be measured at as many locations as possible, and at least at the forward and after ends of the tanks, with a wedge correction used, where applicable, to calculate liquid residues. Tank cleaning hatches should be utilised as appropriate. It is never in the ship’s interest for the OBQ to be underestimated. This will result in an overstatement of the ship loaded figure, exposing the ship to an unwarranted short delivery claim.

During Loading

The tank loading sequence should be planned in advance with the ship’s stability and stress conditions in mind. It is customary to begin loading at a slow rate, with the rate increased to maximum once it is established that cargo is entering the correct tanks and that there are no leaks from hose connections or any other difficulties. It is recommended that, at an early stage, the cargo officer should satisfy himself that the correct grade of cargo is being loaded, either by checking the specific gravity of a sample or, at least, by visual means. The ship’s instrumentation may facilitate remote monitoring of temperatures during loading, but in any event it is essential to measure accurately and to record the temperature in each tank during loading. It is not advisable to use an average of the tank temperatures as this leads to inaccurate cargo figures.

The loading rate should be compared hourly with the shore tank discharge rates, where available, to help ensure that the cargo is not being misdirected in the loading terminal. Any changes in the loading rate or any stoppages must also be recorded. During the final stages of loading, the rate should be reduced to a minimum in order to permit measurement of the quantity of cargo so far loaded and to calculate the correct finishing ullage in the last cargo tank.

On Completion of Loading

Before the cargo hoses are disconnected, the ship’s figures must be calculated to check that the correct quantity of cargo has been loaded. While it is in the ship’s interests to measure the cargo on board ship, it is customary for various witnesses to attend this operation and, in some cases, to make independent calculations. These witnesses may include representatives from the loading terminal, the shippers and the charterers. It is of prime importance that the measurements of ullage, temperature and, where appropriate, water dips are agreed by all concerned, although it must be accepted that the methods of calculation employed thereafter may not always be consistent. It is generally accepted that the latest edition of the ASTM-IP-API Petroleum Measurement Tables (Reference 28) is more accurate than older tables, but it should be borne in mind that all tables are based on the average characteristics of a range of oils. Where a surveyor is attending on the ship’s behalf, he should collaborate with the ship’s officers to ensure that no inconsistencies arise in the calculations.

Ship’s tanks may be calibrated using imperial or metric units of volume and the quantity of cargo may be expressed in various units including long tons, tonnes or barrels. Whichever units are applied, it is essential to compare like with like. The use of standard volume may be considered preferable as it is less susceptible to misinterpretation by observers or laboratories. The glossary at the end of this chapter lists the common terms and abbreviations used in the measurement of liquid cargoes.

Ullaging

This is the measurement of the distance from the datum point at the top of a tank to the surface of the liquid cargo. In the past, this was usually carried out by means of a steel tape fitted with a weighted brass bob, but many tankers are now fitted with fixed gauging equipment in each tank. Electronic portable measuring devices are also available.

A ship, whether afloat, alongside a jetty, at anchor or at sea, is a moving platform and even a slight movement will affect the accuracy of measurement.

In any single tank, a difference of one inch in the ullage may involve a volume of several hundred barrels. Where a ship is pitching or rolling, it is recommended that five measurements are taken from each tank. The highest and lowest should be ignored and the middle three averaged. Weather and sea conditions at the time of the measurement survey should be logged.

Some factors may affect the calculation of OBQs, particularly residues on tank floors and structures, and these will vary with the age of the vessel and previous cargoes carried. It is not unusual for ullages to be recorded for the purpose of determining ROB and OBQ when the trim of the vessel, at the time of survey, is such that the ullaging tape or sounding rod is not perpendicular to the ship’s tank bottom on contact. In such cases, it follows that the depth of ullage obtained must be inaccurate. Clingage is a further consideration because, while crude oil washing (COW) reduces clingage for most crudes, there are a few types where the reverse is true.

Temperature

The temperature of liquid in a vessel’s tank is generally obtained by the use of a cup case thermometer, although some vessels are now equipped with electronic temperature sensing devices. Cup case thermometers are unreliable and errors of ±2 to 3°C are not unknown. Electronic temperature measurement devices have a greater accuracy, typically ±0.1°C. Great care should be taken when using a manual thermometer to ensure it is not affected by the environmental temperature after it has been removed from the oil.

The vertical positioning of the thermometer in a vessel’s tank, particularly at the discharge port, is critical because significant temperature variations can develop within the cargo tanks during the voyage. Cargo temperature may vary at different levels in the tank so, where possible, the temperature should be averaged from at least three readings (upper, middle and lower). Further, as temperatures vary from tank to tank, calculations of quantity must be calculated using individual temperature corrections for each tank.

Water Dips

Free water beneath a crude oil cargo is normally measured with a sounding rod. Water finding paste or electronic interface tapes may also be used for the detection of free water. Unfortunately, neither of these methods can be used to distinguish accurately between an emulsion and free water. Each method involves the risk of inaccuracies that can only be determined by proper sampling and analysis techniques.

Sampling

When calculating cargo quantities, the ship has to rely upon certain data supplied from the shore, in particular the density of the cargo that is calculated after the analysis of samples. Shoreline samples may, however, contain inaccuracies and cannot always be accepted as being representative of the cargo loaded. It is recommended that, with crude oils, the standard sampling ‘thieves’ should not be used. Clean sample bottles should be used to acquire individual samples from each level (ie top, middle and bottom of each of the ship’s tanks) and clearly labelled.
During such an operation, volatile fractions may be lost to the atmosphere with the result that the density established from the final mix does not represent the true density of the cargo in each tank. This, in turn, may later have a significant effect upon the calculation of weight and bottom sediment and water.

Density

Despite practical difficulties, it is best practice to ensure that the density of the cargo on board is measured and compared with the figures supplied by the terminal. An error of 0.01 kg/l can alter the tonnage calculation on a VLCC by 3,000 t.

Measurement Errors

Studies by a major oil company revealed that a measurement error of ±0.21% may occur when calculating the measurement of volumes and an error of ±0.25% when calculating weights. Therefore, measurement errors may easily account for what has previously been termed a ‘measurement error loss’ or ‘measurement tolerance’.

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