Ullage Agreement

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The term “ullage agreement” is commonly used in the oil and gas industry, particularly in the transportation and storage of liquid products. Essentially, an ullage agreement is a contract that outlines the terms and conditions for the measurement, storage, and delivery of petroleum or other liquids.

Ullage refers to the empty space in a storage container or tanker. When liquid products are shipped or stored, they need to be measured accurately to ensure that the correct amount is delivered and invoiced. This is where an ullage agreement comes in – it sets out the specific requirements for measuring the liquid levels, as well as the procedures for handling any discrepancies or shortfalls in the quantities.

Some of the key elements typically covered in an ullage agreement may include:

– The types of measurements used (e.g. dipstick, gauging tape, electronic sensors)

– The frequency of measurements, and who is responsible for carrying them out

– The acceptable use of additives or blending, and any associated costs

– The specifications for the storage containers or tanks

– The procedures for handling overfills or underfills, including who is liable for any losses

– The payment terms for the products delivered

Ullage agreements can be particularly important when multiple parties are involved in the transportation or storage of a liquid product. For example, if a tanker is loaded at one facility and then transported to another for unloading, there may be several companies or individuals responsible for measuring and handling the liquid levels along the way. An ullage agreement can help ensure that everyone is on the same page, and that any discrepancies are addressed fairly and transparently.

Overall, an ullage agreement is an important tool for ensuring that liquid products are transported and stored safely, accurately, and cost-effectively. If you are involved in the oil and gas industry, it is worth familiarizing yourself with the basics of these agreements and seeking professional legal advice when drafting or negotiating them.