Petroleum tables claimed to be wrong

Though oil prices are currently at an all-time high, producers are still not being paid their fair share, according to an observation made in an article published last week in the popular shipping magazine Fairplay.

The article claims that the Petroleum Measurement Tables from which all sea-borne and much land-borne crude is measured, are wrong. Guessing at the amount of money involved, it estimates that the buyers of crude may have received oil worth more than $30 billion for which they did not pay.

The revised tables were introduced in 1980 and since then, the producers have lost out, the shipowners have carried more oil than they were paid for and less petroleum tax was collected from countries where oil is taxed.

Explaining the errors, it was argued that the American Petroleum Institute (API), which was responsible for revising the tables, assumed that oil was a Newtonian fluid and that it expanded and contracted at a steady rate as it heated and cooled. But its rate of expansion and contraction was not uniform.

When the cargo temperature and the cargo gravity was selected in the tables, the co-efficient that would have reduced the volume of cargo to that which it would have been at 60 degrees Farenheit was wrong not much, but by only about 0.2 per cent.

But it was enough to represent the equivalent of 250 VLCCs full of oil which the producers were never paid for. The article suggested that Saudi Aramco did not altogether trust these tables, but still relied on the previous tables produced in 1950.

Although not totally accurate, the Saudi company thought it better to go with the previous version. It is reported that it conducted a study into the behaviour of crudes and published a paper in the Oil and Gas Journal in the USA, but it was largely ignored by the petroleum industry.

So what is the answer? It is clear that some tables are needed. It is also clear that the scientist who discovered this anomaly and published it in a thesis at Trondheim University, a certain Dr. Tim Gunner from Norway, has got all the relevant figures at his fingertips.

After all, he has studied thousands of crude samples from around the world over the past 12 years. The API spent half a million dollars in 1975 revising the Petroleum Measurement Tables. Perhaps the oil producers should give Dr. Gunner a similar amount in today's equivalent value and ask him to come up trumps.

VLCCs

This was a foreshortened week in the Western Hemisphere. But it did not stop a rebound in VLCC rates when the market opened last Tuesday.

Arabian Gulf/East voyage rates were lifted by five points to end the week at about Worldscale 60.

Cargo movements to the West did not firm as much, but WS57.5 WS58.75 was seen.

More cargo was also quoted from West Africa and the rates for trips from there to the US rose above WS80. More fuel oil cargoes are also flowing east from Northern Europe and the Caribbean and rates are firming slightly here too.

Suezmax

The million barrel tanker market is a bit slow all over at the moment, and no real rate movements have been seen. Gulf/East lacked sufficient cargo quantities to excite many owners and it was flat in the Med and the Black Sea.

West Africa is still suffering from supply problems as 23 per cent of oil supplies are still shut-in in Nigeria.

But rates firmed substantially although crude oil stocks in the United States are at record levels and so are the prices. Sometimes, these things just don't make sense.

Aframax

The rates Gulf/East have firmed slightly since last week with many charterers finishing up their April business before concentrating on May.

A long-haul Gulf/East voyage on a double-hull ship now attracts a rate of around the WS135 level. The tonnage list for the next few weeks is still looking fairly long with plenty of double hulled vessels featuring. There does seem to be a balanced supply of tonnage so rates should not firm further.

In Indonesia a quiet week was seen with Indonesia to South Korea paying a rate of about WS125.

In North West Europe, the North Sea Aframax market has seen little activity. Despite this the tonnage list looks a little thinner.

The rates seem to have moved above WS100 as a result. But the cargo supply seems to be quite slim for the end of April and early May for Inter-UK Cont movements.

The Caribbean market showed some signs of improvement, but this week's quotes will show whether this is more of a permanent situation.

- The writer is a shipbroker and marine consultant with more than 40 years of experience in the tanker and dry cargo markets.