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## Understanding Sensitivity analysis

Suppose you expect a new product line to start generating a certain amount of annual profit a year from now. What if some variable in the scenario changed? How would that affect your overall evaluation of the investment opportunity?

Sensitivity analysis enables you to ask just this kind of question. It also helps you see the ramifications of incremental changes in the assumptions that underlie a particular projection. A sensitivity analysis shall determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions. This technique is used within specific boundaries that depend on one or more input variables, such as the effect that changes in interest rates (independent variable) has on bond prices (dependent variable).

Example:

Kedai Jam Terlajak Laris (KJTL) is considering investing in a new line of serving carts. Key stakeholders have different assumptions about this investment:

The three different assumptions are

• Aarif, the vice president of the company’s hanging-racks division, would exercise day-to-day oversight of the new product line. He projects that the new line will generate MYR 60,000 in annual profit for five years.
• Adi, the company’s CFO, is a bit wary about the investment. That’s because he thinks that Aarif has drastically underestimated the marketing costs necessary to support the new line. He predicts an annual profit stream of MYR 45,000.
• Luqman, KJTL’s senior vice president for new business development, is optimistic by nature. He’s convinced that the serving carts will practically sell themselves, producing an annual profit stream of MYR 75,000 a year.

KJTL conducts a sensitivity analysis by calculating NPV for the three different profit scenarios:

Yield three different results:

• NPV for Aarif’s scenario is MYR 2,742.
• NPV for Adi’s scenario is MYR – 60,443 (a negative NVP).
• NPV for Luqman’s scenario is MYR 65,927.

If Adi is right, the serving carts won’t be worth the investment, since the NPV for this scenario is significantly negative. But if Aarif or Luqman is right, the investment will be worthwhile marginally so according to Aarif’s profit projections, and very much so according to Luqman’s.

This is where judgment comes into play. If Adi is the best estimator of the three, KJTL’s board of directors might prefer to accept her estimate of the new line’s profit potential. Better still, the company should analyze its marketing costs in greater detail.

Whichever route KJTL takes, the sensitivity analysis will give the board of directors a more nuanced view of the investment and how it would be affected by different assumptions.

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## Understanding Operating ratios

Operating ratios, like profitability ratios, link various income statement and balance sheet figures. In addition, they help you assess an organization’s operating efficiency—everything from how efficiently it uses its assets to how solvent it is. The table below describes some common operating ratios:

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## Understanding Profitability ratios

Profitability ratios give the avenue to evaluate a company’s level of profitability by expressing sales and profits as a percentage of various other items.

Here are the most basic profitability ratios:

There are many other ratios in addition to those shown in the table, including: return on net assets (RONA), return on total capital (ROTC), return on invested capital (ROIC), return on capital employed (ROCE) and earning before interest, tax, depreciation and amortization (EBITDA).

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## Ratio analysis

By themselves, financial statements tell you quite a bit. But how do you interpret all the numbers these statements provide? For example, is your company’s profit large or small? Is the level of debt healthy or not?

Ratio analysis helps you dig deeper into the information in the statements. A financial ratio is two key numbers from an organization’s financial statements expressed in relation to each other.

There are numerous kinds of financial ratios:

We will discuss further on these ratio analysis in next post.

p.s. already updated, just click on the links above for further details.

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## Assumptions, estimates, and biases on financial statements

In order to really understand an organization’s income statement, balance sheet, and cash flow statement, you need to know the assumptions, estimates, and biases behind the numbers in those statements.

Three areas to focus on are:

• Accruals and allocations
• Depreciation
• Valuation

## Accruals and allocations

An accrual is the portion of a revenue or expense item that is recorded in a particular time span. Product development costs, for instance, will likely be spread out over several accounting periods. So a portion of the total cost will be accrued each month. The purpose of accruals is to match costs to revenues in a given time period as accurately as possible.

Allocations are apportionment (the act of dividing costs between different accounts in a fair way) of costs to different departments or activities within a company. For example, “overhead” costs such as the CEO’s salary are often distributed across the company’s operating units.

To determine accruals and allocations, the people in your organization’s accounting department have to make assumptions and estimates.

## Depreciation

Accountants use depreciation to allocate the cost of equipment and other assets to the total cost of products and services on the income statement. Depreciation is based on the same idea as accruals: Accountants want to closely match the costs of a company’s products and services with what was sold.

Most capital investments other than land are depreciated: Accountants try to spread the cost of the expenditure over the useful life of the item. Accountants have a good deal of discretion as to how they depreciate equipment. And that discretion can have a considerable impact.

## Valuation

Valuation entails figuring out how much a company is worth. Publicly traded companies are valued every day by the stock market: They’re worth whatever their stock price is times the number of shares outstanding. The resulting figure is known as their market capitalization, or “market cap.”

Companies are bought and sold on the basis of these valuations. They get loans based on them. And employees base decisions about whether or not to hold stock in their company on them.

But market cap doesn’t necessarily capture a company’s value in certain circumstances. For instance, a competitor seeking to acquire a company might decide to pay a premium for the company’s shares. That’s because the target business is worth more to that competitor than it is on the open market. If a bidding war starts, the share price could get pushed up far beyond the levels of industry peers.

When it comes to valuation, different methods produce different results. That means each method injects a bias into the numbers.

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## Three financial statements

These three financial statement offers three different perspectives on the organization’s financial performance:

• Income statement. This statement shows “the bottom line.” It indicates how much profit or loss your organization generates over a period of time (could be a month, a quarter, or a year).
• Balance sheet. This statement shows a snapshot of the organization’s financial position including its assets, liabilities, and equity at a specific point in time. It tells you how efficiently it’s using its assets and managing its liabilities.
• Cash flow statement. This statement tells where the organization’s money is flowing in from, and where it’s flowing out.

## Income statement

Your organization’s income statement tells you if the company is making a profit that is, whether it has positive or negative net income. For this reason, the income statement is also commonly known as a profit-and-loss statement.

An income statement shows an organization’s profitability throughout the year—typically, by presenting monthly, quarterly, and year-to-date summaries of its operations. In addition, it tells you how much money the organization is spending to make that profit which can also be called its profit margins.

To present this profitability picture, the income statement starts with a company’s revenues: how much money has come in the door from its operations. Various costs which include the likes of making and storing its goods, depreciating plant and equipment, interest and taxes which are then deducted from the revenues. The bottom line, what’s left over is the net income, or profit.

## Balance sheet

Organizations prepare balance sheets to summarize their financial positions at a given point in time.

A balance sheet uses double-entry accounting, a system that ensures that each transaction balances. This system relies on the following basic equation:

Assets – Liabilities = Owner’s equity

Assets are the things an organization owns in order to conduct business and run its  day-to-day operations.

Examples of assets would include:

• Property, such as the land where operations are located
• Buildings
• Equipment from machinery to file cabinets
• Cash and cash equivalents, such as checking accounts, and Treasury bills or government notes
• Investments, such as stocks and bonds

To acquire such assets, a company often borrows money from creditors. Money owed to creditors are called liabilities.

Owner’s equity, also known as shareholders’ equity, is what’s left over after total liabilities are deducted from total assets. Thus, a company that has \$3 million in assets and \$2 million in liabilities would have owner’s equity of \$1 million.

Balance sheet data is most helpful when you compare it with information from a previous year.

The balance sheet “balances” your organization’s assets and liabilities. Promises and agreements made with customers are balanced against promises and agreements made with vendors, lenders, and stockholders.

The balance sheet thus shows how much, and where, the organization has made investments (its assets). It gives you an idea of how efficiently it’s utilizing its assets and how well it’s managing its liabilities. The information is broken down into how much of this money comes from creditors (liabilities) and how much comes from stockholders (equity).

## Cash flow statement

Cash is an asset account on an organization’s balance sheet representing:

• Paper currency and coins
• Negotiable money orders and checks
• Bank balances

A cash flow statement gives you a peek information into the organization’s checking account. Like a bank statement, it tells how much cash was on hand at the beginning of the period, and how much was on hand at the end of the period. It then describes how the organization spent its cash. As with a checkbook, spending of cash is recorded in negative figures, and the receipt of cash is recorded in positive figures.

If you’re a manager in a large organization, changes in its cash flow won’t typically have an impact on your day-to-day functioning. Nevertheless, it’s smart to stay up-to-date with your organization’s cash flow projections. That’s because these projections may come into play when you prepare your budget for the upcoming year.

If cash is tight, you’ll probably be asked to be conservative in your spending. If the organization has a lot of cash, you may have opportunities to make new investments for your group such as hiring new people or buying needed equipment.

Cash matters for other reasons too:

• Cash is a reality check. The income statement and balance sheet, however useful, contain biases resulting from the assumptions and estimates built into them. The cash flow statement doesn’t contain such biases. It tells you in objective terms whether your organization has cash to pay employees, pay its bills, and even invest in equipment. Shortage of cash can be an early warning sign of trouble.
• Cash doesn’t equal profit. Since profit starts with revenue, it always reflects customers’ promises to pay. Cash flow, by contrast, always reflects actual cash transactions. Meanwhile, expenses on the income statement don’t reflect cash going out. But the cash flow statement does.
• Cash connects with everything else. Cash transactions ultimately affect the income statement and balance sheet. And accountants use both statements to calculate cash flow. Your organization’s cash situation reflects what’s going on now, where the enterprise is headed, and what senior management’s priorities will likely be. Also, no matter where you work in your organization, you have enormous power to affect its operating cash flow through everyday, on-the-job decisions. Managers who show they understand cash flow and who affect it positively get noticed positively.

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## Accounting methods

Before you can understand the financial statements your organization uses, you need to understand the accounting methods companies use. But this and other aspects of financial intelligence are hard to talk about without examples and data.

There are two accounting methods that are important to know about:

• Accrual accounting
• Cash-basis accounting

### Accrual accounting

Most companies use accrual accounting. Income and expenses are booked when they’re incurred, regardless of when payment from customers has actually been received or suppliers’ invoices have actually been paid.

With accrual accounting:

• Revenues are recognized during the period in which the sales activity occurred.
• Expenses are recognized in the same period as their associated revenues.

### Cash accounting

Some companies, usually very small ones, start out using cash accounting. With this method, a company records transactions when cash actually changes hands.

This practice is less conservative when it comes to recognizing expenses. That is, more items can be counted as expenses than under accrual accounting. But cash accounting can be more conservative than accrual accounting when it comes to recognizing revenue. The differences in expense and revenue recognition between the two methods have tax implications.

As companies grow in size and complexity, it becomes more important to match revenues and expenses in the appropriate time periods. So companies tend to switch from cash accounting to accrual accounting.

That’s because accrual accounting records revenues and expenses in the same time period based on their causal relationships. This enables managers to measure the business’s performance without including mistimed transactions that distort the reported figures.

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## Note on Metric Tonnes & Long Tonnes Conversion

From Kiloliters to Metric Tonnes.

1. Metric Tonnes = Volume in Kiloliters * (density – 0.0011)
2. Weight in air factor = density – 0.0011

From Kiloliters to Long Tonnes.

1. Long Tonnes = Volume in Kiloliters * (V.C.F. from ASTM D1250 T57)

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## Determination of Quantity During Custody Transfer at FSO & FPSO Facilities

3. Hydrocarbon : referring to crude oil and condensate
4. Repeatability : tolerance for the percentage of variance between the initial and the next meter run (normally around 0.025%)

## THE METERING SYSTEM

In hydrocarbon custody transfer at FSO and/or FPSO facilities, quantities delivered are determined from 3 sources namely, FSO/FPSO metering quantity, tank dipping and export tanker tank dipping (in the order of priority).

Normally, the FSO/FPSO metering quantity will be used as the Bill of Lading (BL) quantity, while FSO/FPSO tank dipping and export tanker tank dipping are used as figure comparison only.

However, in certain circumstances, the meter quantity could be declared as ‘null’ and ‘void’, and if this happens, then the FSO/FPSO tank dipping quantity would be taken for the BL figure.

### 1.0 THE METERING SYSTEM

The metering system usually include:

1. Meter stream of 3-5 meter runs (could be more);
2. Bi-directional ball type proper loop (pipe prover)
3. An automatic sampling system (usually either flow-proportionate or time-proportionate sample grabbing system)

#### 1.1 METER

Typical meter used maybe Turbine or Positive Displacement (PD) meter where electrical pulses are generated to determine the quantity of liquid transferred. These electrical pulse are then ‘translated’ to volume by using the pre-set K-factor (pulse/KL).

Liquid Turbine meter measurement combines the turbine and electronics to measure total flow (or flow rate) within a piping system. Turbine meter is a volumetric measurement device which function by sensing the linear velocity of the fluid passing through the known cross sectional area of the meter housing to determine the volumetric flow rate. The fluid, as it passes through the meter, imparts an angular velocity (RPM) to the rotor, which is proportional to the linear velocity of the flowing fluid. Since the linear velocity of the flowing fluid thru a given area is directly proportional to the volumetric flow rate, it follow the speed of rotation of the rotor is directly proportional to the volumetric rate.

Positive displacement meter is a type of meter that requires the fluid being measured to mechanically displace components in the meter in order for any fluid flow to occur. A basic analogy would be holding a bucket below a tap, filling it to a set level, then quickly replacing it with another bucket, and timing the rate at which the buckets are filled or the total number of buckets for the totalized flow.

### 1.2 PROVER LOOP

Due to flow dynamics and also different conditions during custody transfer (e.g. flow rate, temperature, pressure), meters may not be able to compute the quantity transfer with accuracy. Therefore, in order to reduce these errors, meters have to be proved using the prover loop.

This is done by allowing liquid to flow in the prover loop and after 1 complete run; the quantity computed by meter would then be compared with the calibrated prover loop volume which is know as PROVER BASE VOLUME.

#### Simple example:

(A) Calibrated Prover Loop volume (Prover Base Volume): 3.2916241 KL

(B) Meter computed volume: 3.2946184 KL

As such the meter correction factor woul be : A/B, which is 3.2916241 over 3.2946184 = 0.999091

#### Note that:

• meter volume corrected for temperature and pressure
• prover volume corrected for temperature and pressure with the correction for temperature and pressure for steel included.

The meter correction factor is similar to that of the vessel experience factor (V.E.F) where the factors maybe a ‘gain’ or ‘loss’.

#### There are 2 scenario for computation of meter factors

1. In each run and after applying the necessary corrections, the meter factors are calculated. After 5 consecutive acceptable runs (REPEATABILITY), the 5 meter factors are average off to obtain an average meter factor for that particular meter/stream.
2. The corrected prover base volume is then divided by the corrected/average meter volume from the 5 consecutive acceptable runs (REPEATABILITY).

• 5 acceptable run (as per ASTM & SIRIM (Malaysia) requirement)
• to ensure meter performance are within allowable tolerance (normally 0.025%)
• If meter cannot be proved, used the last proven meter factor.
• valid for 3 consecutive lifting/custody transfer per meter/stream
• similar flow rate, temperature, & pressure are used.
• Prover loop are required for annual calibration.

Meter factor = Prover base volume / meter’s indicated volume.

### 1.3 AUTOMATIC SAMPLING SYSTEM

Normally a flow proportional type (may also be time proportional) automatic sampling system is included in the crude custody transfer metering system. The automatic sampler will be program to automatically ‘grab’ samples throughout the loading operation. Samples collected would then be thoroughly mixed by circulating the samples inside the sampler pot/can with an electrical pump/mixer.

Samples collected would then be distributed to relevant parties (as per buyer request) in sealed can and also be analyze for density (ASTM D 1298) and BS&W (ASTM 4007). The results of the analysis will be used for computation of the metered quantity.

Some terminal may adopt a certain procedure for the amount of sample collected by the auto inline sampler whereby the programmed / requested quantity should not be;

• less than 80% of the sample amount requested
• more than 120% of the sample amount requested.

If the amount collected exceeded the minimum or maximum quantity, then the auto inline sample is rejected and the hourly sample or tank fiscalized sample will be used for quality determination.

With all the data generated from the metering system, the meter quantity is then computed automatically by the meter and a meter delivery report is produced (maybe also referred to as Batch Report).

### 2.0 CHECKS TO BE MADE ON DELIVERY REPORT / BATCH REPORT

If available, counter check all data in the generated delivery report with the stream’s microcomputers. All data should be the same. If some data differs, may have to be re-compute metered quantity manually using the final data from the stream microcomputers.

There are typically 2 types of cases for delivery report.

CASE 1:

Based on the sample above, used streams are named MT93B & MT93C.

(a) Manually calculated individual stream calculation to confirm the total stream gross volume.

(b) check for the batch flow weighted average temperature as follows.

X = (Stream MT93B × FWAT_Stream_MT93B) / Total Stream Gross Volume.

Y = (Stream MT93C × FWAT_Stream_MT93C) / Total Stream Gross Volume.

Therefore, X + Y = Batch Flow Weighted Average Temperature.

Note: Only for the utilized stream.

X = 26, 456. 041 (41.8) / 51, 125.838 = 21.630208

Y = 24, 669. 797 (41.8) / 51, 125.838 = 20.169792

FWAT = 21.6+20.8 = 41.8 Deg C.

(c) check for the batch flow weighted average pressure as follows.

X = (Stream MT93B × FWAP_Stream_MT93B) / Total Stream Gross Volume.

Y = (Stream MT93C × FWAP_Stream_MT93C) / Total Stream Gross Volume.

Note: Only for the utilized stream.

X = 26, 456. 041 (278) / 51, 125.838 = 143.856

Y = 24, 669. 797 (270) / 51, 125.838 = 130.283

Therefore X+Y = batch flow weighted average pressure

FWAP = 144+130 = 274 KPAG

(d) Check for correct meter factors input.

(e) Check the correct density, API @ 60 º F and BS&W input.

(f) Convert Total Batch Gross Volume to Gross Standard Volume as follows.

=(Batch Gross Volume × Batch V.C.F) / (1 – Batch compressibility factor × FWAP)

*However, please make sure step (c) are correct and same as per batch report since the total batch standard volume might be a bit difference due to metering system decimal error.

**if step (c) are correct, step (f) should also be correct.

CASE 2

(a) Check that correct meter factors input

(b) Calculate all streams gross standard volume individually as follows:-

Batch Finish – Batch Start = Batch Gross Volume × Meter Factor × VCF × CPL

(c) Add all gross standard volume for all streams = Total Gross Standard Volume

## (3) DECLARING THE METER QUANTITY AS ‘NULL’ & ‘VOID’

• Gross meter versus tank volume comparison is out of normal limits and reason to doubt meter integrity. (usually set at 0.5% meter and shore tank).
• if all stream malfunction as follows:
• unable to prove meter figure for (3 consecutive times, utilizing MF for 3 consecutive lifting.).
• Significant leak at stream inlet or prover outlet.
• the stream microcomputer malfunction due to presence of significance computer alarms which could affect the integrity of the volume.
• any malfunction of the stream instrument (e.g. Pressure transmitter (PT) or Temperature Transmitter (TT))

If there are only 3 streams available and 2 of them are malfunction (as per above condition), then the meter are deem invalid as it is unable to load with 1 stream due to flow rate limitation (low).

## (4) FSO/FPSO TANKS QUANTITY (BEFORE LIFTING)

For crude custody transfer, the nominated tanks are gauged ( including temperature and free water ‘cut’) and sampled.

The tasks conducted before crude custody transfer as follow:

(a) Gauging

Above are some of UTImeter used for Marine terminal gauging.

Gauging of nominated tanks is conducted by utilizing a sonic tape/ullage interface tape (MMC/UTI brand). Before gauging, the sensor probe is place with water finding paste to obtain free water ‘cut’, if any. Ullages are taken and average off, however, this is much dependent on the sea condition.

Temperature is taken using the same ullage interface tape and is taken according to the following procedure:

Level –

0 – 3 meter = 1 point (middle)

3 – 5 meter = 2 points (top & bottom)

Above 5 meter = 3 points (top, middle, bottom)

*Note: Top – 1 meter below liquid level, Middle – middle of liquid level, bottom – 1 meter above the datum plate / tank bottom.

After confirming the ullages and temperatures, slowly allow the sensor probe/bob to touch bottom tank and immersed the probe/bob with water finding paste as follow:

• Light product – immersion period between 5 – 10 seconds
• Black/Heavy product – immersion period between 20-30 seconds.

Then, wound up the tape and inspect the probe/bob for any color changes i.e. from orange to red (indicates water ‘cut’).

(b) Sampling

Sampling in crude tank is conducted using a portable sample probe with detached reciprocating type mini manual pump.

Sample is taken using the portable sampler probe and is taken according to the following procedure:

Level

0 – 3 meter : 1 Level (middle)

3 – 5 meter : 2 level (upper and lower)

Above 5 meter : 3 level (upper, middle, lower)

Note:

Upper – 1/6th of liquid depth below liquid surface. (5/6th of liquid level)

middle – middle level of the liquid

lower – 1/6th of liquid depth from bottom.

(c) Sample Analysis

Sample collected are then analyzed for required specification, typically density and BS&W for crude.

• Density (ASTM D 1298) using density hydrometers. The observed densities at ambient temperatures obtained are converted to standard density @ 15 °C by using ASTM Table 53.
• BS&W (ASTM D 4007) that is Centrifuge method.

In summary, before crude lifting to export tanker, FSO/FPSO nominated tanks are:

• Gauged ( Ullage, temperature, free water)
• Sampling of crude
• Analysis of crude sample.

It is also prudent to check the condition of non-nominated tanks and their related valves. This includes ullages of cargo in tanks and related valves are properly shut/sealed, sea chest and slops overboard valves are properly shut/sealed.

## (5) COMPUTATION OF FSO/FPSO QUANTITY BEFORE LIFTING

(a) Ullage corrections – the ullage taken must be corrected for the following.

• Gauging tape correction – applied as the gauging reference point is read on the tape, while the actual reference point usually at the top of the vapor lock valve/gauging pipe. Gauging tape correction is done by minus the additional height of the gauging tape before applying ullage value in the tank calibration table. Gauge perimeter are spell out in the tank calibration table.
• List correction – applied when the FSO/FPSO is listing (tilting) toward either portside (left) or starboard (right) side. This can be verified thru clinometers which will give the value in degrees. List correction is to be referred to tank calibration table.
• Trim correction – applied when FSO/FPSO is ‘trimming’ by the stern (Aft) or by head (forward). This is the difference between the forward draft marks and aft draft marks.
• Note: if the aft draft mark is more than the forward draft marks then it is trim by stern.
• If the forward draft mark is more than the aft draft mark, then it is trim by head.
• Trim correction is to be referred to tank calibration table.

(b) The gross volume (based on aforementioned corrections) are to be corrected to standard volume using V.C.F from ASTM table 54.

(c) Nett standard volume are obtained after less BS&W % based on sample analysis.

(d) To convert to barrels @ 60°F – multiply with factor obtained from ASTM Table 52 with reference to the sample density.

(e) To obtain weight in metric tons – volume KL @ 15°C multiply with weight correction factor (WCF) from ASTM Table 56 with reference to standard density. (factor in KG/Litre)

(f) To obtain weight in long tons – volume KL @ 15°C multiply with weight correction factor (WCF) from ASTM 57 with reference to sample standard density. or weight to weight conversion by applying factor from ASTM Table 1.

## (6) FSO/FPSO TANKS AFTER LIFTING

After completion of lifting operation, the FSO/FPSO nominated tanks are then re-gauge (ullage, temperature) .

Quality of crude are based on before lifting quality results.

## (7) COMPUTATION OF FSO/FPSO TANK QUANTITY (AFTER LIFTING)

• Same calculation method as per before lifting.
• Tank figure quantity deliver = Quantity before lifting – Quantity after lifting
• Once this completed, the FSO/FPSO Tank Measurement Report (Tank Figure) is issued.

(a) On board quantity (OBQ) inspection – before the loading operation, the nominated and non-nominated tanks are inspected for condition for any quantity therein. In view of tanks of the inert gas in tanks, visual inspection is not possible. As such tanks are gauged using brass sounding rod. (Advisable to put water finding paste at end of rod to verify free water presence in tank)

Compute OBQ based on tanks calibration table. (Note: If free flowing liquid, apply trim. If sludge, no trim correction)

Issue OBQ report (when applicable)

(b) For non-nominated tanks, if with cargo in transit, then is gauged and temperature reading taken. Compute quantity to gross standard volume applying density as per cargo manifest or shipping documents from the Loading Port.

(c) Check pump room condition so that its clear of cargo and subsequently sealed the sea chest and slop overboard valves. (NEVER ENTER PUMP ROOM ALONE, ALWAYS BRING A BUDDY)

Same as before loading where the nominated tanks are gauged and temperature readings are taken whilst the condition of the non-nominated tanks are re-check for any discrepancy or quantity variance.

## (10) COMPUTATION OF EXPORT TANKER QUANTITY

Similar to FSO/FPSO calculation.

Once the above has been done, then ship ullage report is generated.

(a) Loading On Top (LOT) – sometime conducted on board export tanker when cargo space is not available and such cargo may have to be loaded in slops tank.

This is subject to agreement between Buyer and charterer.

If this operation is conducted, the calculation of loaded are as follow:

The said tank (slop) is gauged & gross quantity at ambient determined from tank calibration table.(Sample also taken and retained)

Tanks are re-gauged and temperature reading taken. Total quantity determined from tank calibration table.

the figure will be at standard volume.

(b) Loading Commingled Cargo – where cargo is loaded commingled when there is insufficient ullage on board export tanker and cargo has to be loaded inside cargo tanks with cargo loaded from previous load-port.

This is subject to agreement between Buyer and charterer.

If this operation is conducted, the calculation of loaded are as follow:

Gauge the nominated tanks and take temperature readings. Determine the tank volume from tank calibration table and compute on board quantity as follows:

A = Tank volume × V.C.F (from load-port)